James Williams, Hedgeweek

Lyxor’s ETF business grows by 14 per cent… Alternative UCITS funds lose 0.33 per cent on average for July…

Sun, 10/08/2014 - 11:54

Alternative UCITS funds absolute were slightly down in July with the UAI Global index losing 0.33 per cent according to Alix Capital, the index provider.

Commodity and equity focused funds were the hardest hit because of challenging conditions in their respective underlying markets – the DJ UBS Commodity Index fell 4.99 per cent and the MSCI World fell 1.67 per cent. As a result, the UAI Commodity lost 1.45 per cent in July while the UAI Long/Short Equity was down 0.66 per cent, the UAI Event Driven lost 0.59 per cent and the UAI Equity Market Neutral lost 0.45 per cent.
 
The best performing index in July was the UAI Emerging Markets, up 0.56 per cent thanks mainly to Chinese focused long/short equity funds. Fixed income alternative UCITS funds are the best performers since the beginning of 2014, with an average progression of 1.57 per cent.
 
London-based Heptagon Capital announced this week that it has partnered with Harvest Global Investments Ltd, part of the Harvest Fund Management Group (Harvest) – the third largest asset manager in China - to launch the Harvest China A Shares Equity Fund. It will become the first UCITS fund vehicle to follow an actively managed strategy in the China A Shares equity market, which provides for daily liquidity under the RQFII program.
 
Heptagon, which runs USD9bn in assets, is launching the fund on its Irish UCITS platform. Harvest has been appointed as the sub-investment manager. The fund will aim to build on the success of Harvest’s ‘Research Select’ strategy, the equity portion of which has outperformed the CSI 300 index by 75 per cent since inception in May 2008.
 
The Harvest portfolio managers employ a Growth At a Reasonable Price (‘GARP’) approach and focus on well-positioned companies, with superior growth and quality.
 
Peng Choy, CEO at Harvest Global Investments Ltd in Hong Kong said: “Harvest was one of the first groups to receive RQFII (Renminbi Qualified Foreign Institutional Investor) status in 2011, and since then we have been at the vanguard of efforts to allow international investors to gain exposure to the economic opportunities in China and indeed the wider Asian markets.
 
“We are now bringing our actively managed China A Share equity strategy to a wider geographical investor base through our sub-investment manager role for Heptagon’s Irish regulated UCITS fund vehicle. Heptagon’s differentiated approach to providing unique and difficult to access investment solutions to sophisticated investors makes us confident that they are the right partner to help us deliver our successful China A share investment approach to international investors.”
 
Commenting on the new fund, Fredrik Plyhr, Founding Partner of Heptagon Capital LLP, said: “We are delighted that Harvest has chosen Heptagon to be its partner for the launch of this historic UCITs fund under the umbrella of our USD3bn Irish fund company. This is the first time that an actively managed, well-performing strategy from a leading domestic asset manager in China has been launched for UCITS investors with daily liquidity. We are very pleased that our clients, as well as the broader UCITS fund investor base, will now have access to the equity capabilities of one of the most widely respected asset management houses in China, with the largest market share by institutional assets under management.”
 
The UK Investment Management Association (IMA) is far from impressed with ESMA. The European regulator has suggested that non-UCITS collective investment funds are more complex than UCITS funds. However, the IMA said that it disagreed with ESMA’s claim in a press release, stating: “The IMA disagrees with Esma’s suggestion that all non-Ucits collective investment funds are complex. Given that many non-Ucits funds are in fact less complex than many Ucits, requiring, as one example, fund platforms to introduce appropriateness tests would be a hugely expensive exercise.”
 
The IMA added that national regulators should be allowed to establish test regimes for UCITS funds to assess whether they “meet the definition of non-complex instruments”.
 
Finally this week, Lyxor Asset Management has seen its assets under management grow by 7 per cent since the end of 2013. This takes its firm-wide AuM to EUR86bn. The growth has been attributed to two factors. Firstly, Lyxor posted a 3 per cent growth in its alternative investments business, with a roughly even split across its managed account platform and its alternative multi-manager solutions business.
 
But the lion’s share of Lyxor’s growth has been attributed to the 14 per cent expansion of its ETF business. It ranks number two in Europe having recorded net inflows of EUR2.5bn; a clear sign that ETF products are continuing to gain succor with European investors.
 
During this period, new ETF equity assets were mainly raised in Emerging Markets and European single country ETFs exposed to Italy, the UK and Spain. In Fixed income, main inflows went to Euro Government bonds and Euro High Yield. 


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