Client Spotlight: 3 Capital Partners

Client Spotlight
3 Capital Partners is a private investment office founded in 2016 and headquartered in Hong Kong. The firm strives to reinvent the idea of investing for ultra-high-net-worth families in Asia with a “purpose-driven, risk-based” endowment-like approach, with the goal of delivering meaningful and long-term sustainable performance. 3 Capital Partners operates with a 100% discretionary business model so the team is fully responsible for all investment decisions and outcomes.


At 3 Capital Partners, the investment process is constantly being refined, while adhering to a ‘purpose-driven, risk-based’ approach aiming to achieve long-term and consistent investment outcomes for their clients. Establishing a scientific, systematic, and quantitative way to analyze the risk of the overall portfolio and underlying holdings is one of the critical elements in their approach.

3 Capital Partners realized that it can be inefficient and labor-intensive to gather and process external manager strategies’ information with traditional tools. They needed a scalable and advanced solution that can seamlessly integrate with their investment process.



3 Capital Partners has partnered with Venn by Two Sigma to help with several key workflows:

  • Portfolio Management Capabilities
  • Portfolio Construction Processes
  • Ongoing Manager Due Diligence Efficiencies


Strengthening Portfolio Management Capabilities

Venn offers seamless data integration with certain third-party service providers through an API connection. By leveraging Venn’s framework and capabilities, 3 Capital Partners can more conveniently assess and monitor their real-time risk exposure on multiple layers. The portfolio holdings and performance data are directly fed into Venn from a third-party portfolio management system on a daily basis.

Before using Venn, we manually uploaded our portfolio data to another third-party software for risk analysis, which only provided the headline Value at Risk (VaR) data for a portion of our portfolio (publicly-traded securities only). By establishing an API connection between our portfolio management system and Venn, we are now able to evaluate the risk of our portfolio on multiple layers (from holistic, sub-segment and security levels). In addition, we can systematically monitor and review our portfolio risk in real-time. The quantitative analysis, including factor exposures, risk statistics, simulation analysis data, provides us with ‘risk-based’ guidance to complement our qualitative ‘purpose-driven’ decision making and review process.

Enhancing Portfolio Construction Processes

Venn selects a parsimonious set of factors it determines to be most relevant to build its proprietary factor model. This enables 3 Capital Partners to identify and interpret the important inherent risk drivers in their portfolio, by only including factors determined to be the most relevant and intuitive.

Prior to using Venn, we relied on the traditional asset allocation concept (Fixed Income, Equity, Hedge Fund, and Private Equity etc.) to select suitable investment tools and to construct portfolios. Venn’s unique risk factor model equips us with new insights when selecting suitable investment tools in the universe and constructing a meaningfully diversified portfolio.  

We have always strived to further refine our distinctive ‘purpose-driven, risk-based’ investment approach. Having Venn’s risk factor model allows us to establish a scientific and unique way to identify the risk exposure and determine the purpose of our investments, unconstrained by the traditional asset allocation mindset. From a portfolio construction perspective, stocks and bonds have always been considered as negatively correlated and hence the pair has been well-received by most investors as a good risk diversifier. However, Venn has long proven that certain high-yield bonds have significant exposure to the Equity factor, and it is unsurprising that these bonds may not be the optimal tool to diversify equity risk. Venn’s factor model complements the core of our investment philosophy well, where we seek to identify the relevant and critical risk factors - to achieve a meaningful portfolio risk diversification and a sustainable performance.

Improving Ongoing Manager Due Diligence Efficiencies

Venn provides a central repository with extensive fund data. 3 Capital Partners leverages Venn to efficiently evaluate third-party manager funds, either using Venn’s standard or easily customizable templates, significantly reducing the need for Excel and saving huge amounts of time.

Venn provides us a simple yet comprehensive way for funds/strategies evaluation. We can quickly put together and review a list of funds/strategies using a customized view. 

In addition to comparing the performance of different managers via various quantitative metrics in a standard and systematic way, we also assess the historical risk factor exposure and performance of these managers on a rolling period basis to ensure that the managers have delivered consistent results that are in-line with their value propositions over a long period. This is what we emphasize on to deliver consistent long-term results for our clients.

Results and What’s Next

Venn’s advanced proprietary factor model, coupled with a systematic and highly customizable user interface helps 3 Capital Partners to quantify risk exposure on multiple layers, from portfolio to security level, thereby enhancing our portfolio analytics capability.

Looking forward, the firm wants to build an ecosystem of synergistic tools comprising client relationship management, portfolio management, portfolio analytics, and order management systems. 3 Capital Partners explains, “we want to maintain a level of flexibility to cater to our ever-evolving business development and investment needs. With the ecosystem of synergistic tools, we can build a more scalable business with stronger investment and execution capabilities to achieve the long-term objectives of our clients.”  


DisclaimerThe Venn subscriber featured on this page was not compensated for their statements. As a Venn subscriber, their use of portfolio analytics or other Venn features and their experience could differ from your organization’s due to their particular use of Venn, the version of Venn used, or other factors. Not all subscribers will be equally satisfied. The person providing this testimonial was selected based on a variety of factors, some of which are subjective. This document is for informational purposes only. Not an offer to buy or sell securities. Click here for Important Disclosure and Disclaimer Information

The information contained in this article is provided for general informational and educational purposes only, and should not be construed as investment advice. The contributor to this material is associated with a client of Two Sigma Investor Solutions, LP (“TSIS”). Neither TSIS nor its affiliates have compensated the contributor for his statements. The statements from the interview have been edited and reformatted by TSIS with the contributor’s approval. Unless otherwise noted, the contributor’s statements do not represent the actual views or opinions of TSIS or its affiliates, or any officers, directors, or employees thereof.

This article is not an endorsement by Two Sigma Investor Solutions, LP or any of its affiliates (collectively, “Two Sigma”) of the topics discussed. The views expressed above reflect those of the authors and are not necessarily the views of Two Sigma. This article (i) is only for informational and educational purposes, (ii) is not intended to provide, and should not be relied upon, for investment, accounting, legal or tax advice, and (iii) is not a recommendation as to any portfolio, allocation, strategy or investment. This article is not an offer to sell or the solicitation of an offer to buy any securities or other instruments. This article is current as of the date of issuance (or any earlier date as referenced herein) and is subject to change without notice. The analytics or other services available on Venn change frequently and the content of this article should be expected to become outdated and less accurate over time. Any statements regarding planned or future development efforts for our existing or new products or services are not intended to be a promise or guarantee of future availability of products, services, or features.  Such statements merely reflect our current plans.  They are not intended to indicate when or how particular features will be offered or at what price.  These planned or future development efforts may change without notice. Two Sigma has no obligation to update the article nor does Two Sigma make any express or implied warranties or representations as to its completeness or accuracy. This material uses some trademarks owned by entities other than Two Sigma purely for identification and comment as fair nominative use. That use does not imply any association with or endorsement of the other company by Two Sigma, or vice versa. See the end of the document for other important disclaimers and disclosures. Click here for other important disclaimers and disclosures.

This article may include discussion of investing in virtual currencies. You should be aware that virtual currencies can have unique characteristics from other securities, securities transactions and financial transactions. Virtual currencies prices may be volatile, they may be difficult to price and their liquidity may be dispersed. Virtual currencies may be subject to certain cybersecurity and technology risks. Various intermediaries in the virtual currency markets may be unregulated, and the general regulatory landscape for virtual currencies is uncertain. The identity of virtual currency market participants may be opaque, which may increase the risk of market manipulation and fraud. Fees involved in trading virtual currencies may vary.

Ready to Talk?

Contact us to set up an initial conversation about Venn