With increased volatility starting to buffer equity and bond markets, investors have taken reassurance from the fact that the FundLogic Alternatives platform may provide the fund strategies needed to navigate the uncertainty.
Since the start of June, German bund yields have climbed from 0.53 percent to 0.815 percent, reaching a YTD high of 0.99 percent on 10th June. Global equity markets have seen a sell-off and although still in a six-year bull cycle, are starting to get a little toppish.
According to Stephane Berthet (pictured), Head of the FundLogic Alternatives platform, investors realise that potentially neither their equity or fixed income returns are going to be as strong as they have been over the last five years.
"The way investors are expressing this concern is rotating out of long-biased equity long/short strategies into more defensive strategies. With respect to the fixed income and credit markets, credit spreads have tightened and analysts believe there could be more downside risk than upside gains; like equities, investors are looking for more credit spread neutral exposure or hybrid strategies," says Berthet.
There is a range of funds on the FundLogic Alternatives platform that fit the bill. On the equity long/short side, there is the MS Ascend UCITS Fund, which is a US equity long/short manager with a low net bias.
In fixed income, one fund that has been attracting attention is the MS TCW Unconstrained Plus Bond Fund; a strategy managed by Metropolitan West Asset Management LLC that uses a top-down, bottom-up approach to select mispriced bonds across multiple fixed income asset classes.
On the hybrid side, the Salar Convertible Absolute Return Fund (SCARF) is a low volatility convertible bond strategy managed by Ferox Capital LLP.
All of these funds are proving useful to investors and indicate the careful consideration that goes into selecting the most appropriate strategies for the platform.
"There has to be a clear alignment of interests with us and our investors. It's about striking the right balance in terms of what investors are looking for and what we need to diversify the platform further," says Berthet. "Clearly we don't want to position the platform like a fund supermarket. Our aim is to have around 20 to 22 funds."
Currently, FundLogic Alternatives has approximately USD2.7 billion in AUM spanning 16 funds. Four new funds have been onboarded since last June, with the most recent addition (in February) being the MS Tremblant Long/Short Equity UCITS Fund, adding to the platform's coverage of global long/short equity managers.
Berthet confirms that two further funds are in the process of being onboarded; one a CTA fund, the other a global macro fund.
As Berthet confirms, the best performing fund YTD is up over 20 per cent; MS Dalton Asia Pacific UCITS Fund, an Asia Pacific long/short equity fund.
"If you were to take an equally-weighted view of all the funds on the platform, the performance was 11.5 percent in 2013, 6.7 percent in 2014 and we are already in the region of 4.5 percent as at June 2015. So performance-wise it's very attractive," confirms Berthet, who says he's confident that the platform could reach USD4 billion by year-end.
"We have a solid pipeline, we are seeing a lot of appetite from investors. One can never predict the future but we feel we are well on track to where we want to be," concludes Berthet.
