Cross-border distribution into Asia facing challenges, JPMAM close statistical market neutral fund, Fitzsimmons to depart Threadneedle
Independent corporate governance and support services provider, Carne Group, has published the latest addition of its UCITS Guide for Alternative Managers reported FINalternatives this week. Described as an “ideal primer” for fund managers, the guide has been updated in order to reflect the changes made to European funds under the UCITS IV directive. John Donohoe, CEO of Carne Group, was quoted in a statement as saying: “We've seen growing interest in UCITS on the part of alternative fund managers since we published our first UCITS guide. With this publication, we've set out to explain what fund managers need to be thinking about when they go down the UCITS IV route, helping them to avoid many of the common pitfalls that could delay a fund launch.”
Over at Threadneedle Investments it was revealed this week that the firm’s head of government bonds, Quentin Fitzsimmons, had resigned to take a “career break”. According to Investment Adviser, Fitzsimmons is set to leave in mid-July having spent nine years there. In addition to acting as sole portfolio manager for the GBP288million Defensive Equity and Bond fund and GBP182million Threadneedle Defensive fund Fitzsimmons also co-manages the GBP480million Absolute Return Bond fund and GBP258million Target Return fund with Matthew Cobon. Cobon will now become lead manager on these two funds with responsibility for managing the other funds falling to members of Fitzsimmons’s investment team.
Jim Cielinski, head of fixed income at Threadneedle, said he was “very sorry” to see Fitzsimmons leave. A group statement said: “Quentin has decided to take a career break and has resigned from Threadneedle. Regretfully he will leave the firm in mid-July.” Cielinski said that the firm was making changes to strengthen and expand its fixed income platform and would have liked Fitzsimmons to have been “part of our future growth. However, we respect his decision and we wish him and his family well and thank him for the outstanding contribution he has made.” The Threadneedle Absolute Return Bond fund has generated 22.7 per cent over five years to May 23.
In other news JP Morgan Asset Management has decided to close the JP Morgan Highbridge Statistical Market Neutral fund after the authorised corporate director (ACD) decided it would be in the best interest of investors reported Fundweb. One of the reasons why the fund, which runs a modest GBP12.8million in assets, is closing is based on expectations that it would see redemptions later this year; a case then of jumping before potentially being pushed. The ACD is reported to believed that AUM, which hasn’t grown significantly, was unlikely to attract inflows in the foreseeable future. Termination was due to commence 23 May having already received approval from the FSA. A JP Morgan spokesperson said: “The closure does not affect the Luxembourg domiciled SICAV, the JPMIF Highbridge Statistical Market Neutral Fund, which has a current AUM of EUR437million.” Confirming the closure of the fund the spokesperson added: “The fund will close to new investment in May 2012 and will be terminated in October 2012. Investors in the fund have been informed of the closure.” The fund, managed by Highbridge Capital Management, was launched in August 2010.
Finally, in what has largely been a pretty quiet week in the alternative UCITS space, a panel of industry experts discussing the future distribution of UCITS products at a recent Association of Luxembourg Fund Industry (ALFI) conference in London voiced concerns over the cross-border opportunities for UCITS funds in Asia. The panelists agreed that the long-term future of cross-border UCITS lies in Asia but local domestic pressures are making it harder for foreign institutions to tap into the region’s undoubted potential. Citywire Global reported that the five-strong panel, made up of risk analysts, fund distributors and legal bodies, believed Asian companies were making it harder for western firms to gain a foothold in their respective markets with Marc Evans of PwC in Luxembourg quoted as saying: “A lot of new funds have started up over the past 12 months…but Asia, in particular, has emerged as a hot spot. However, for many Luxembourg-domiciled Ucits funds there is quite a big caveat in that many of these local markets, most noticeably Hong Kong, are becoming more and more difficult to gain access to for foreign firms.”
That’s not exactly what fund distributors will want to hear and could represent further challenges going forward in terms of building product AUM, although it should be added that the UCITS brand remains well regarded among Asian investors. “It is simply getting harder and harder to penetrate the key Asian markets, especially those who are regulated by the FSC, like Hong Kong and Taiwan. I would say the difficulty in entering these markets is now even worse than it was two years ago,” commented Lou Kiesch, a partner on enterprise risk services at Deloitte. Kiesch pointed out that priority was being given to Renminbi-denominated funds, pushing US and European funds further down the waiting list for distribution licenses.
There is, however, nothing implicitly wrong with local markets wanting to protect the interests of domestic products who are struggling to raise assets amidst growing global competition. Freddy Brausch, a partner at Linklaters, said: “To my mind, it does not seem totally illegitimate for these regulators to be concerned that the domestic industry is flat and they are probably getting pressure to not make it easy for these imports to come in.”
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