James Williams, news editor, Hedgeweek

Cheyne Capital and JP Morgan Asset Management launch new funds…French tax on dividends rejected by EU courts… Northern Trust appoints Steve David as Lux country head

Cheyne Capital Management (UK) LLP announced the launch of a pair of UCITS IV funds this week: the Cheyne Global Credit Fund and the Cheyne European Real Estate Bond Fund. Cheyne Capital will act as investment manager to the Ireland-domiciled funds with Citibank International plc (Ireland) acting as both administrator and custodian. Both funds’ investment portfolios will mirror two existing flagship Cheyne strategies. The credit fund will build positions in investment grade and crossover corporate credit. The primary focus will be on North America and Europe where the team believes credit spreads are pricing in too much downside presently given the robust fundamentals of most corporate balance sheets. The real estate fund will focus on high quality real estate-backed bonds. Cheyne’s real estate debt team is Europe’s largest dedicated manager of real estate bonds and loans, running approximately USD1.3billion. Jonathan Lourie, co-founder and chief executive said that the firm was looking forward “to enabling a wider range of investors to access two of our leading and most successful strategies”. Added Chris Goekjian, CIO: “Cheyne believes corporate credit and real estate debt are extremely compelling investment opportunities in today’s markets. Thanks to the firm’s unrivalled expertise in these two asset classes, these flagship strategies have provided solid returns for investors since inception and we are pleased to be broadening their investor base.”

 
Continuing with the fund launch theme, JP Morgan Asset Management announced it had launched the JPM Diversified Real Return fund to help investors hedge against inflation and receive income. FT Adviser reported that John Stainsby, head of UK institutional at JPMAM, said that the fund would be based on a strategy launched by the firm’s Global Multi-Asset Group in the US last year. The portfolio will blend a mixture of inflation-linked bonds with inflation-sensitive equities and real assets to provide positive returns in a range of inflationary or economic conditions. Stainsby said the popularity of index-linked government bonds in the last few years had driven yields to extremely low levels and that the new fund had been designed for investors wanting to diversify their exposure beyond index-linked bonds. “It’s ability to invest across many inflation-sensitive asset classes makes it appropriate for those who want to achieve real returns and recognize the problems that an inflationary environment can pose to long-term investors,” said Stainsby. The fund is registered for sale in the UK and Jersey and its official benchmark in the 1-10 Barclays Capital Index-Linked Gilts Index. Target returns are 3 per cent in excess of the UK retail price index. Around half the fund’s volatility is expected to derive from equities.      
      
Francois Hollande might have succeeded in the French presidential elections but this week the European Court of Justice ruled that French tax rules that slap a 25 per cent tax on dividends earned by non-residents from investments in collective investment schemes breached European Union law. Ten UCITS funds went up against the French government and won the decision which the court said breached the free movement of capital guaranteed by EU law reported the Wall Street Journal. It is believed that some of the funds involved were linked to Spanish bank Banco Santander SA. The court said that while national governments have the right to apply different tax provisions to residents and non-residents those provisions cannot amount to “arbitrary discrimination” or restrictions on free movement of capital. Good to see common sense prevailing in the ECJ. As the court rightly pointed out, tax rules, in any EU member state, should not discourage residents in one member state from making investments in another member state. Uniformity and integrity, thankfully, have been upheld in what was an important case for the UCITS fund community.   
 

Finally, in people moves, it was reported on MarketWatch that Northern Trust has appointed Steve David as Country Head, Luxembourg. It became the first major custodian to obtain a licence to establish a UCITS-compliant management company when it opened its Luxembourg office in 2004. David will report to Toby Glaysher, head of Northern Trust’s Global Fund Services activites in Europe, Middle East and Africa. David will be responsible for leading the continued expansion of the firm’s specialist fund servicing and custody operations in Luxembourg. Glaysher said that on the back of tremendous growth in Luxembourg in recent years David would focus on “continuing to drive this growth while managing our expanding and evolving service offering”. “Our priority is to ensure that Northern Trust remains positioned to provide world-class fund administration services,” said Glaysher.

 

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