Bonus fears for US managers under proposed UCITS V rules… Alternative UCITS gain 1.06 per cent in February…
February proved to be a more positive month performance-wise for alternative UCITS funds with the UCITS Alternative Index Global returning 1.06 per cent. All strategies, bar two, posted positive returns.
As was the case in January, the best performing strategy was long/short equity, gaining 2.14 per cent to leave it up 2.05 per cent YTD. Also doing well in February were CTA, event-driven and emerging markets strategies, gaining 1.27 per cent, 0.95 per cent and 0.95 per cent respectively. FX and volatility strategies registered minor losses of 0.28 per cent and 0.08 per cent. Behind long/short equity, the next best performing strategies on a YTD basis are UAI Event-Driven and UAI Equity Market Neutral, up 1.07 per cent and 1.00 per cent. The UAI FX is down 0.95 per cent YTD.
Invesco this week announced the launch of the Invesco Global Targeted Returns Fund, the first to be managed by its newly formed Multi Asset investment team based in Henley-on-Thames. The fund is the next step by Invesco to build a market-leading franchise in multi asset investing to meet the needs of advisers and their clients, after the success of the “Risk Parity” strategy of the Invesco Balanced-Risk Allocation Fund.
The new strategy has been created by an experienced team led by David Millar, along with fund managers Dave Jubb and Richard Batty. The team takes an unconstrained, conviction-led approach to multi asset investing. Alongside them, two further investment specialists complete the team - Georgina Taylor, Product Director and Gwilym Satchell, Risk Manager.
The Invesco Global Targeted Returns Fund focuses on a robust three step approach which starts with generating investment ideas from across asset classes and geographies, combining these ideas into a single, diversified portfolio using a robust risk-based fund management framework, and then implementing these investment ideas through Invesco’s trading desks.
Sergio Trezzi, Head of European Retail, said: “With the launch of Invesco Global Targeted Returns Fund (GTR) we offer the opportunity to combine diversification and risk control with the aim of delivering positive returns in the long term.”
David Millar, Head of Multi Asset Investment at Invesco, added: “Being provided with the opportunity to bring our multi asset experience to a global firm such as Invesco, and sit amongst some of the best, like-minded, long-term fundamental thinkers is a privilege. As a team we believe that the way to achieve true diversification is to break away from the constraint of asset class labels and bring good investment ideas, which cross asset classes and geographies, together into a single diversified portfolio. This strategy, combined with the fact that we can draw on the immense intellectual capital of Invesco investment team gives us the ability to create something market leading.”
According to the Exane report, Absolute Return UCITS Fund Performances – February 2014, the Salus Alpha RN Special Situation fund was the second best performing fund of 19 funds ranked under the event driven UCITS category, as reported by Hedgeweek this week. The fund was up 1.90 per cent in January.
Oliver Prock, chief executive and chief investment officer of Salus Alpha Capital, commented: “Our fund seemed to repeat the January stint in February and in the coming months because our approach is unique and able to generate positive returns in all environments, since it combines an opportunistic core portfolio of selected, fundamentally attractively valued top companies with positions in short/medium-termed special situations. Also the fund targets to achieve an absolute return independent of the development of the overall equity market.”
UCITS V is set to become a nightmare for US managers currently managing, or with designs on managing, UCITS funds. This is due to an important European agreement which – in a similar vain to the AIFMD – intends to put the brakes on fund managers paying themselves excessive bonuses. Proposed rules, which are set to be passed into European law in 2016, will require managers to have half of their bonuses paid in units of the fund they manage reported the Financial Times this week. Also, 40 per cent of their bonuses will have to be deferred for at least three years.
The problem with this is that US fund managers - or indeed any US investors - are prohibited from investing in UCITS funds. Declan O’Sullivan, a partner at law firm Dechert, was quoted by the Financial Times as saying: “This will be troubling for US managers who are pretty much precluded from investing in Ucits. They could [receive bonuses via] a note or derivative linked to the performance of the fund, but this would be hugely complicated and an annoyance.”
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