Insparo Asset Management has bucked the industry trend by offering shorter redemption terms for Africa & Middle East fund.
The Insparo Africa & Middle East Fund returned 31.4 per cent in 2009, outperforming the MSCI Frontier Markets Index which returned seven per cent over the same period.
Insparo says the dislocations caused by the economic landscape have allowed the fund to take advantage of value opportunities across its target markets. This strategy has enabled the fund to outperform the underlying indices while preserving liquidity.
The fund previously had a two-year lock in period, but Insparo believes it is in the best interest of its existing and future investors to pass on the liquidity premium through shorter terms.
A staggered one year redemption profile will allow investors greater flexibility. Investors will be able to redeem 25 per cent of their original share purchase per quarter, meaning they can be fully withdrawn within a year. If necessary, investors can redeem within as little as three months, upon payment of compensating redemption fees to other investors.
Although Insparo has not received any early requests for redemption since launching the fund, the firm believes that in the current environment fund managers must be more attuned to investor sentiment.
Mohammed Hanif, chief investment officer at Insparo, says: “In the current climate, fund managers should be adapting to the needs of their investors, not the other way round. The climate is much more uncertain, and investors need to be offered more flexibility. While many managers have remodelled their structures to deter or prevent redemptions, we have made it easier for investors to withdraw if they wish. We’re confident that the only true deterrent to redemptions is high returns.”
In addition to the revised redemption terms, Insparo has also revamped the fund’s risk management platform and infrastructure. Through increased trading lines to specialist brokers and more robust operational procedures, the firm is able to accommodate a wider range of financial products.
The Insparo Africa and Middle East Fund currently has USD165m of assets under management. Investors include IPGL, a private holding company in which Michael Spencer, chief executive of Icap, together with his wife and family trusts, are majority shareholders; and South African entrepreneur Mark Shuttleworth’s Here Be Dragons.
