James Williams, news editor, Hedgeweek

CIMB-Principal Islamic Asset Management establishes UCITS platform for Islamic funds, Matrix Group to close UCITS platform…

Quantitative asset manager, Aquantum AG, which specializes in developing scientific methods to build managed futures strategies and is also a specialist index provider, is planning to launch its first UCITS fund in the fourth quarter of 2012. Thomas Morrow, formerly a senior scientist at leading CTA firm, Winton Capital, established Aquantum in 2008. The firm’s Pegasus index, which tracks advanced managed futures trading strategies, has just reached its three-year track record during which time it has produced good positive returns with low volatility and has attracted more than USD1billion of investment notional.

The new fund will invest in almost 50 futures markets reported FT Adviser and use multiple trading strategies including long-term trend following, pattern recognition and countertrend trading. All asset classes will be considered, except commodities. “Given the popularity of our indices, the establishment of a full-scale asset management business to directly harness Aquantum’s unique quantitative trading expertise is a natural next step,” commented Morrow in the firm’s official press release.

Other key members of the team include: Dr Oliver Podobrin, a former CERN scientist and leading derivatives expert; Moritz Seibert, formerly responsible for Royal Bank of Scotland’s equity structuring business in the Americas; and Dr Jochen Mirth, Christian Schneider and Oliver Grimm: all former partners of Luxembourg-based fund manager Assenagon Group. Said Seibert: “By harnessing the talents of our team members, who all have distinguished track records in their fields, and by applying the latest technology and thinking, we seek to offer a managed futures product that really does offer persistent positive performance, uncorrelated with other investments.”     

Matrix Group has taken the decision to close its Dublin-domiciled UCITS platform – Matrix UCITS Funds - just two years after it launched in May 2010. There are currently four sub-funds sitting on the platform: Matrix Asia Fund - managed by Rupert Foster -, Matrix Lazard Opportunities Fund, Matrix New Europe Ucits fund (which closed this May), and Cantab Quantitative Ucits. The Matrix Asia Fund is scheduled to close on 7 September, with all monies returned to shareholders. In total the four sub-funds held more than USD230million of assets.

Despite strong asset raising for these sub-funds it seems that competing with the big banking platforms proved difficult. A Matrix spokesperson was quoted as saying: “It continues to prove difficult for independent platforms to achieve the economies of scale enjoyed by the larger, bank-owned and supported Ucits platforms,” adding that Matrix was “working with the sub-funds to help smooth any transition process”.

BNP Paribas is launching a structured product UCITS fund to give investors exposure to European equities reported MoneyMarketing this week. Scheduled to launch in September, the BNP Paribas Defined Return Europe Opportunity Fund is a six-year auto-call product linked to the Euro STOXX 50 Index and is to be managed by THEAM, a subsidiary of BNP Paribas Investment Partners.

The fund’s counterparty will be BNP Paribas and will be collateralized with either cash denominated in USD, sterling, euros, or government bonds issued by the UK, Germany, France, Sweden, Austria, Belgium, the USA or the Netherlands. The fund will pay out an 8 per cent coupon for each year the investment is held provided the index closes at or above 100 per cent of its initial level on any annual valuation date. Investors only get their capital back if the Euro STOXX 50 index is not below 50 per cent of its initial value at maturity.

The start of Islamic funds using the UCITS wrapper for cross-border distribution across Asia (and beyond) is now underway thanks to the efforts of Kuala Lumpur-based CIMB-Principal Islamic Asset Management; a joint venture between the CIMB Group and Principal Global Investors. This week, as reported by The Asset, it was announced that the partnership was preparing to launch three UCITS-compliant Islamic equity funds – which invest in global emerging markets, Asia Pacific ex-Japan and the ASEAN region respectively – having received approval from the Central Bank of Ireland to establish the Dublin-based entity, CIMB-Principal Islamic Asset Management (Ireland) Public Limited.

This is the first time Islamic funds are being marketed from Europe itself, and could set the standard for others to follow in a bid to market their funds to a global audience.

Datuk Noripah Kamso, chief executive of CIMB-Principal Islamic, was quoted as saying: “We have opened the door for other Malaysia-based fund managers to establish a UCITS platform in Ireland. These funds are recognized beyond Europe and meet the needs of institutional and retail investors from many jurisdictions. This is an important step in the development of Malaysia as a centre for Islamic fund management.” The launch of its platform will allow CIMB-Principal Islamic to strongly market its funds to European markets and will target three key segments: institutional investors, HNW individuals and family offices, and finally the mass market.

“For that third market segment, we have to come out with a global fund platform, which is why we have launched the Islamic UCITS – but we cannot sell the funds all by ourselves, we have appointed other banks and fund distributors to reach farther,” commented Noripah.  

This is an exciting development in the UCITS fund space and could well act as the catalyst for a plethora of Shariah-compliant UCITS funds coming to market for a global investor audience. Watch this space.   

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