China-focused Epimelis Capital gains a scalable, efficient system with Enfusion

Epimelis Capital

• Type Hedge Fund, Absolute Return
• Focus Long/short and event-driven, China-focused
• AUM Tier < $100 million
• Client Since 2023
• Profile Epimelis Capital is a Hong Kong-based investment manager focused on generating absolute returns through China-based structural opportunities. The Epimelis team views China as a globally unique market to generate alpha. Epimelis manages two separately managed accounts (SMAs) in addition to its flagship fund.

Since launching in early 2023, Epimelis Capital rapidly expanded its portfolio to 300 equity positions, mainly in China A shares. It needed a robust and modern portfolio management and accounting system to simplify the management of its long/short event-driven fund and its separately managed account (SMA).

Ready for launch

Fei Sun, Founder and CEO of Epimelis, turned to Enfusion. Having used Enfusion in a prior role, Sun was confident in Enfusion’s ability to simplify the technical complexities of managing a new fund.

Implementing Enfusion’s PMS, OEMS, and general ledger allowed Epimelis to streamline its portfolio management, trading, and accounting workflows within a single, straight-through front-to-back platform. Not only did this boost efficiency, but it also provided the necessary tools to manage its positions and strategies.

We own 300 positions, average 50 trades a day, and turn around our portfolio 6–10 times a year, so we must be very efficient. Enfusion makes our processes seamless and gives us that efficiency. – Fei Sun, Founder and CEO, Epimelis”

Seamless service with local support

Enfusion’s local expertise proves invaluable for trading Chinese instruments and efficiently managing operations, particularly in the closely integrated markets of Hong Kong and China. This expertise extends to programs like China Connect and QFII (Qualified Foreign Institutional Investor), which facilitate participation in China.

Enfusion helps us navigate the intricacies of trading Chinese instruments and manage our operations with precision and efficiency.”

Event-driven strengths

Enfusion delivers significant operational advantages tailored to Epimelis’ event-driven trading strategy, which aims for a statistical average of expected return.

Holding periods, rather than company fundamentals, drive the decision to exit equity positions. Using custom strategy tagging and columns in Enfusion allows Epimelis to optimize their trading. Moreover, it also helps track holding periods and facilitates the timing of exits across multiple trading days and market holiday calendars, ensuring the fund can unwind its positions at the optimal time.

Enfusion customizes holding periods and tracks them based on trading days, significantly enhancing the efficiency and effectiveness of our event-driven trade strategies. The alternative would be to use Excel, which would involve exporting and managing data across multiple files.”

From events to data

Enfusion simplifies Sun’s daily data collection process, where he gathers information from various sources, such as press releases and overnight events. Utilizing a template provided by Enfusion, Sun inputs trade details like stock tickers, trade type, quantity, limit prices, prime brokers, and specific requirements. The template is then imported into Enfusion for review and customization as needed.

With Enfusion’s automated pre-trade compliance checks, Epimelis can ensure that trades adhere to internal rules and restrictions before routing the orders to prime brokers. Additionally, Enfusion streamlines dollar swaps by automatically inserting the dollar execution price into a FIX message tag, eliminating the need for manual input of foreign exchange rates during post-trade allocation.

Enfusion is our main tool because it helps us fully automate our trade processes. The ability to go from 90% automated to 100% automated makes a huge difference in our efficiency.”

The right platform for swaps

One of the more complex aspects of Epimelis’ trading operations involves equity swaps, which can significantly impact cash flow. Enfusion’s team worked closely with Epimelis and its Prime Broker to optimize the process of unwinding swap positions on a First-In-First-Out basis and handling bonus share issues accordingly. This collaboration helped Epimelis get a much more accurate handle on cash flow.

The Enfusion team also built a drop copy function that allows trade details to be automatically imported into the PMS and manage between local currency to USD automatically.

Automating these swap processes is not straightforward and requires careful consideration of the nuances. Enfusion’s team worked diligently with us and our prime broker to get us up and running as quickly as possible.”

Accounting excellence

Epimelis also benefits from Enfusion’s general ledger system, which simplifies accounting and facilitates effective monitoring of profit and loss (P&L). Furthermore, Enfusion’s automation simplifies the T+1 reconciliation process.

Enfusion’s automation eliminates the need to manually reconcile quantities and cash balances across multiple prime brokers and fund administrators, greatly enhancing our efficiency.”

Moreover, Enfusion provides rapid access to essential accounting data, enabling Sun to respond to investor inquiries faster. Crucial data on relevant positions, market values, and net exposure are just a few clicks away.

The level of organization and tracking provided by Enfusion’s general ledger would be impossible to achieve using Excel. What would take an hour to do in Excel, we can do in a few minutes with Enfusion.”

Enfusion’s workflow advantage

Sun also described Enfusion’s role in automating and streamlining Epimelis’ reporting workflows. The system enables Epimelis to create structured reports, with categories by order book and metrics for growth exposure, market value, and P&Ls across various timeframes.

With this approach, Epimelis benefits from increased transparency and insights into the performance of its complex portfolio. It also allows Sun to identify contributors to the fund’s performance and manage potential issues effectively.

“I love all the functionalities. I love the system,” Fei Sun concluded.

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