James Williams, Hedgeweek

Finisterre Capital launches UCITS fund in response to Solvency II requirements… Morgan Stanley adds MS Broadmark Tactical Plus UCITS to platform…

Long/short equity emerging market specialist Finisterre Capital this week announced the launch of a standalone UCITS-compliant fund in response to client demand stemming from Solvency II requirements.

The UCITS-compliant Finisterre Emerging Market Debt Fund launched with USD55m of seed capital and deploys a similar long/short approach to that operated across Finisterre’s existing strategies. The fund has an unconstrained mandate, and will invest in a blend of global emerging market sovereign and corporate credits, local fixed income instruments, local and hard currencies and other debt securities. The fund seeks to generate high single digit returns over the cycle and offers bi-weekly liquidity.
 
Paul Crean, co-founder and chief investment officer of Finisterre said: “The Finisterre EM Debt Fund does not track our hedge funds and has its own investment team. The fund will be able to make use of derivatives to express its views and we have the right skill set to hedge for duration risk, spread risk and to apply a macro top-down approach. The long/short strategy employed by the fund will be more diversified, have a lower turnover and have a longer term investment horizon than Finisterre’s traditional hedge fund strategies.”
 
The EM Debt Fund will be managed by Paul Crean and Christopher Watson, supported by a wider 16-person investment team. The fund aims to generate medium to long term returns from a combination of current income and capital appreciation and is part of the Principal Global Investors Funds range of Dublin-based UCITS.
 
In other fund launch news, Morgan Stanley announced the addition of the MS Broadmark Tactical Plus UCITS Fund on its FundLogic Alternatives plc platform. The Fund, which is managed by California-headquartered Broadmark Asset Management LLC, seeks to produce above average risk-adjusted returns with less downside volatility than the S&P 500 Index through any market cycle. The strategy involves taking long and short exposure to equity markets by investing primarily in US equity-based futures, ETFs and options.
 
Stephane Berthet, Head of the FundLogic Alternatives Platform at Morgan Stanley, commented: “This partnership with Broadmark gives investors access to a unique fund that provides a diversifier to their portfolios. The top-down methodology of the strategy is based on the readings of macroeconomic data, including valuation, monetary factors, investor sentiment, and breadth/volume momentum models. The Fund is aiming to take advantage of large institutional managers repositioning their portfolios in the equity markets in response to changes in the macroeconomic environment and investor expectations.”
 
Christopher Guptill, Broadmark’s CIO and co-CEO, added: “Launching a fund with Morgan Stanley allows Broadmark to access the established infrastructure of the FundLogic Platform, enabling us to focus on our investment strategy. We are excited about offering this Fund to European investors, and believe that it offers something unique in the way that it aims to potentially benefit in both bull and bear markets.”
 
Northern Trust has been appointed the fund’s custodian and administrator.
 
Ignis Asset Management has made its first foray into the onshore hedge fund space by launching a non-UCITS version of the GBP1.5billion UCITS-compliant Ignis Absolute Return Government Bond Fund. The new fund – Ignis Global Macro Government Bond Fund - has been seeded with GBP25million and is registered in Luxembourg as a Specialised Investment Fund (SIF), suitable only for eligible institutional investors. The Ignis Absolute Return Government Bond Fund has delivered a total of 18.5 per cent, equivalent to an annualized return of seven per cent, since inception, with a low level of risk.
 
The new SIF will share the same team, process and strategy as the Ignis Absolute Return Government Bond Fund; however, risk will be doubled. Accordingly, the fund will target a higher volatility of eight per cent to 12 per cent and a higher absolute return of 10 per cent to 12 per cent per annum over cash.

 
The fund will achieve its target returns by translating macroeconomic views into carefully diversified long and short positions predominantly in the most liquid government bonds and currencies. Underlying investments will be split into seven diversified sources of alpha that will be carefully blended to provide a low correlation with other assets in order to deliver positive returns regardless of market conditions.
 

 
Claude Chene, global head of distribution, said: “This fund will appeal to well-informed investors who may already value the Ignis Absolute Return Government Bond Fund but are looking to target a higher level of risk for a higher potential return.
The fund builds upon Ignis’ strong track record in managing absolute return strategies and is being launched in response to specific demand from existing and prospective clients.” 

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