James Williams, Hedgeweek

Small ETFs post compelling returns in 2013… FCA clarifies notification process for marketing UK UCITS funds in Europe…

Rudolf Wolff, the London-based fund management firm, is preparing to launch a UCITS version of its Bermuda-domiciled Income fund, reported FTadviser this week. Bruce Macdonald, who manages the Rudolf Wolff Income fund, is to run the new fund, which is to be domiciled in Ireland.

The fund will target a gross yield of between 5 and 7 per cent. It will invest in a range of fixed income stocks issued by financial institutions including permanent interest bearing securities (Pibs) from the likes of Nationwide and Skipton, both of which are building societies. Liquidity in the fund will initially be mid- and month-end. Rudolf Wolff hopes to the launch the new fund in November and is currently in asset raising mode. It will target wealth managers and family offices. Other funds are believed to be in the pipeline at the firm, including a futures high frequency trading fund and a global long/short equity fund. 

London-based firm, Pactum Asset Management, has launched its inaugural fixed income strategy so as to capitalize on near-term market trends, reported Citywire Global. The Luxembourg-domiciled Pactum Bond Fund officially launched at the end of June and aims to harvest returns by capturing short and mid-term market dislocations through investing in sovereign bonds and credit. The fund also has the remit to tactically invest in some equities of G10 countries, listed equity derivatives, FX and also gold. As for geographic focus, the main priority will be continental Europe. Japan, the UK and South America make up 7 per cent, 6 per cent and 2 per cent of the fund’s net assets. 
 
The UK’s financial regulator, the Financial Conduct Authority (FCA) this week provided details on marketing a UK UCITS to other Member States in Europe. In accordance with Article 93 of Directive 2009/65/EC, managers must submit to the FCA a fully completed notification letter and the latest scheme documentation. All notifications must be submitted electronically. The following documents must be submitted alongside the notification letter:

  • The latest version of the instrument constituting the scheme
  • The latest version of the prospectus
  • Where they exist, the latest annual report and any subsequent half yearly report, and
  • The key investor information document(s)

The FCA notes that the relevant competent authority of the Member State into which the manager intends to market the fund may also require additional information as part of the notification. “For example, some host state competent authorities need details of the paying agent, some need to see the facilities agent agreements and some require tax information to be included in the prospectus,” wrote the FCA. They added that upon receipt of the completed notification it would be sent “within 10 business days” to the relevant competent authorities of the Member States in which the UCITS proposes to be marketed. 
 
Thirty-three of the 50 best-performing ETFs of 2013 are funds that began the year with less than USD100million in assets, reported Bloomberg this week. And it seems small is beautiful. Not only have these funds delivered on performance, they’ve attracted USD1.2billion in net new assets. This compares to USD3.8billion brought in by the 17 larger ETFs. Bloomberg listed five ETFs up more than 30 per cent this year, each of which has also broken through the all important USD100million barrier. These include:
 
1. Guggenheim Spin-Off ETF (CSD): Assets have shot up from USD67million to USD280million in this ETF which tracks recently spun-off companies. Half of the fund holds small-cap stocks, the other half in mid- to large-cap stocks.
 
2. Powershares Dynamic Media Portfolio (PBS): A similar story. Assets have climbed from USD86million to USD226million. The fund’s index is weighted based on stock fundamentals such as earning and price momentum rather than market capitalization.
 
3. DB X-Trackers MSCI Japan Hedged Equity Fund (DBJP): A phenomenal jump from USD5million to USD157million in AuM, the fund is up 33 per cent so far this year thanks to exposure to financial stocks, which have performed well in 2013.
 
4. Powershares DWA SmallCap Technical Leaders Portfolio (DWAS): A quasi-active ETF that tracks 200 small-cap stocks from a universe of 2,000 using technical analysis. The fund has outperformed the iShares Russell 2000 by 10 per cent over the past 12 months.
 
5. iShares U.S. Insurance ETF (IAK): As the name suggests, this ETF tracks a basket of insurance company stocks. It is up some 33 per cent so far in 2013. 

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