James Williams, Hedgeweek

Alternative UCITS enjoyed continued growth in Q3 according to Alceda… Neuberger Berman launches Absolute Return Multi-Strategy Fund

Neuberger Berman, one of the world’s leading asset managers, this week announced the launch of the Neuberger Berman Absolute Return Multi-Strategy Fund (ARMS), following the rapid success of the US regulated version of the same strategy, launched in May 2012. 

The multi-manager product targets positive absolute returns with low market exposure through diversified allocations to proven hedge fund strategies.  At the same time, it addresses the structural drawbacks of hedge fund investing through a client-friendly UCITS vehicle. The structure offers investors key features such as daily dealing, no performance fees at any level, a capped total expense ratio, high levels of transparency and control of assets through the exclusive use of managed accounts. 
 
Neuberger Berman’s alternative investment management group, with over 35 staff and a track record of hedge fund investing of more than 11 years, will manage the fund and will be backed up by independent firm risk management and operational functions. 
 
Fred Ingham, Co-Portfolio Manager for the Neuberger Berman ARMS Fund said: “In the current environment of low bond yields and longer term inflation risk, as well as uncertain equity valuations, hedge funds can offer a particularly attractive alternative, with the ability to benefit from rising rates, as well as from increasing dispersion in global equity markets.”
 
Dik van Lomwel, Head of Neuberger Berman EMEA and LatAm added: “We wanted to offer clients the opportunity to re-engage with hedge funds at an opportune time, but within a structure which directly tackles the historic drawbacks of cost, liquidity and transparency.”
 
In other fund launch news, Harcourt, the alternative business of Vontobel Asset Management has expanded its offering with the launch of two UCITS funds: the Vontobel Fund – Pure Momentum Strategy and the Vontobel Fund – Pure Dividend Strategy.
 
The two funds are part of the product line called “Research-Driven Strategies”. The name is intended to illustrate that alternative risk premiums are mostly a reflection of a given trading strategy followed by an investor. Both funds are actively managed, with investments made strictly according to rule-based methodologies that aim to capture clearly defined alternative risk premiums. The funds aim to achieve a risk-adjusted return exceeding the 3-month LIBOR by 300 to 500 basis points.
 
The Vontobel Fund – Pure Momentum Strategy aims to benefit from trends in the global financial markets. The fund invests primarily in various liquid asset classes such as futures, equity swaps and collateral debt securities. The goal is to achieve consistent returns by combining various momentum strategies to capture and exploit the observable trends in the market.
 
The Vontobel Fund – Pure Dividend Strategy strives to systematically participate in the dividend stream of high-payout companies whilst at the same time reducing equity market risk significantly. The fund invests in companies with higher-than-expected average dividend yields with the aim to provide stable returns during times of low interest rates.
 
“The improved macroeconomic climate has created significant new opportunities for investors to benefit from market upswings”, said Jan Viebig, CEO of Harcourt and portfolio manager of the Vontobel Fund – Pure Momentum Strategy. “We believe these two funds are ideally placed to support traditional portfolio allocations, while delivering the enhanced diversification investors require in the post financial crisis world.”
 
Demand for alternative UCITS funds continued in Q3 2013 as equity markets continued to rally, according to the latest Alceda Quarterly UCITS Review.
 
Tracking the Absolute Hedge Alternative UCITS Index (“the Index”), which encompasses 454 funds, total AuM reached EUR154.4billion, an increase of 2.6 per cent on the previous quarter. Following a challenging Q2 where the sector declined 0.53 per ce, alternative UCITS strategies rebounded in Q3 2013, gaining 1.09 per cent to leave them up 3.12 per cent year to date.
 
The Review found that stronger equity markets resulted in the AH Equity Long Short Index becoming the best performing strategy in Q3, gaining 2.98 per cent. This makes it the top performing strategy YTD, up +7.68 per cent. European-focused strategies dominate the equity long/short space both in terms of number of funds (60) and AuM (EUR6.9billion).
 
In contrast, macro and trend-based strategies continued to face challenges last quarter. FX and Managed Futures strategies declined 3.29 per cent and 2.42 per cent in the quarter respectively. Both strategies were also hit by declining assets with a reduction in AuM of 10 per cent for FX strategies and 3.1 per cent for Managed Futures strategies.
 
Michael Sanders, Chairman of the Board, Alceda Fund Management S.A. said:With Equity Long Short as the strongest performing category in the quarter and over the year, it appears investors are looking for higher returns and diversification through alpha. With the strong performance of equity related strategies in 2012 and in the year to date, it is unsurprising we are seeing strong investor demand in the strategy and we would expect this to continue in Q4 2013.” 

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