James Williams, Hedgeweek

Chile back on the map for managers of Irish UCITS… Alternative UCITS grew 21% year-on-year in Q4, says Alceda report…

Sun, 02/02/2014 - 13:25

Natixis Global Asset Management has come to market with the launch of a new UCITS fund. As reported by Citywire Global, the firm has launched a UCITS-compliant version of its Global Emerging Bonds fund. Until now the fund had only been available to French investors when it launched in October 2011.

The UCITS fund will be available to investors in Belgium, Germany, Italy, Luxembourg, the Netherlands and the UK and joins Natixis’s Luxembourg-domiciled SICAV. Sebastien Thenard and Brigitte Le Bris will continue to run the investment strategy as lead managers. The fund invests approximately 70 per cent of its assets in emerging market bonds issued by both sovereigns and corporates, with Citywire Global adding that the fund has the option to invest up to 30 per cent in international bonds.
 
The alternative UCITS sector grew by an impressive 21 per cent in Q4 2013 compared to Q4 2012 according to the latest Alceda Quarterly UCITS Review. A strong rally in equity markets towards the end of the year supported demand for alternative UCITS strategies, helping Q4 close with gains of 2.7 per cent. AuM reached EUR159.4billion in Q4, an increase of 3.2 per cent on the previous quarter.
 
As equity markets continued their strong performance in the last quarter of the year, the AH Equity Long Short Index kept its position as the top performing strategy in the year with a 12.3 per cent increase over 2013, following the 4.3 per cent uplift in Q4 2013. In addition, AUM within Equity Long Short reached EUR18.4billion, registering a 17.2 per cent increase over the quarter. FX strategies were hard hit with both gains and assets declining 15.4 per cent and 33.3 per cent, respectively, in Q4 2013, leading to an overall decline in performance of 1.3 per cent in 2013.
 
Q4 2013 was a particularly active quarter with regards new alternative UCITS launches, with 17 new funds across strategies coming to market, primarily within the Equity Long Short and Credit Indices. In line with the new issues across strategies, the report revealed that investors are increasingly happy to support new products with new funds achieving significantly higher launch assets, often within their first year.
 
Michael Sanders, Chairman of the Board, Alceda Fund Management S.A. said: “The results of the Alceda UCITS Review in Q4 2013, and over the full year, demonstrate the growing investor confidence in the global economic recovery and the continued demand for alternative UCITS strategies.
 
“While the overall results were encouraging, there was a significant dispersion in performance between the best and worst performing funds in the space. Equity Long Short, the strongest performing category over the year, outperformed FX strategies by over 60%, demonstrating the importance of good fund selection and portfolio diversification.
 
“The universe saw Assets under Management grow by over EUR25billion over 2013, translating to a growth rate of 21 per cent. With investor confidence growing, and more funds being driven into Alternative UCITS strategies, as well as a supportive regulatory environment, we expect this positive trend to continue into 2014.”
 
This week Alix Capital announced the winners of the 2013 UCITS Alternative Index (UAI) Awards. The awards cover 13 categories with two awards for each category based on one-year and three-year classification. Winner of the 2013 best single UCITS absolute return fund was MS Algebris Global Financials over one year and Odey UK Absolute Return Fund over three years.
 
Winner of the best Emerging Markets fund was the Veritas China Fund (one year) and GAM Star Lux – Emerging Alpha (three years). The best fixed income fund went to Muzinich Long/Short Credit Yield Fund (one year) and M&G Optimal Income Fund (three years), whilst the best event-driven fund for both categories was awarded to the MLIS York Event-Driven UCITS Fund.
 
Commenting on the awards event, Louis Zanolin, CEO of Alix Capital, said: “I would like to congratulate all the winners of the 2013 UCITS Alternative Index (UAI) Awards. These distinctions reward not only the best performing funds over the last 12-month period but also the ones that succeed over the longer term which is really what investors are looking for.
 
“2013 also marks another strong year for UCITS absolute return fund sales with total assets under management increasing by 34 per cent to reach EUR190billion. The strong performance of the 2013 UAI Award winners is an additional sign showing that the scale and quality of UCITS absolute return funds is continuously improving.”
 
It looks like Chile is back on the map for managers of Irish UCITS funds. Eighteen months ago Irish UCITS were placed on a restricted investments list by the Comision Clasificadora de Riesgo (CCR), the country’s pensions’ regulator, after Irish sovereign debt was downgraded to junk status. However, the decision by Moody’s, Fitch and Standard & Poor’s to upgrade Irish sovereign debt to investment grade status should open the door to Irish UCITS wishing to attract Chilean pension assets according to law firm Dechert.
 
CooConnect quoted Declan O’Sullivan, a partner at Dechert in Dublin, as saying: “The restrictions on Chilean investments in Irish UCITS did put the Irish industry at a competitive disadvantage to other UCITS domiciles such as Luxembourg. The news that the major credit rating agencies have upgraded Irish sovereign debt will help Irish UCITS once again restart their applications to register as UCITS in Chile and target Chilean pensions, which are a significant source of investor capital.”


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