BlackRock this week launched a new absolute return fund for European institutional investors. The BlackRock Multi-Strategy Absolute Return Fund is the firm’s first UCITS-compliant multi-strategy alternative fund in Europe.
Ingo Heinen, Head of BlackRock Alternative Investment Strategies in Europe, said that there was a trend in Europe towards institutions seeking alternative investments via regulated ‘onshore’ vehicles.
“Many clients want diversified exposure to funds that add alpha and provide a different set of returns to equities and bonds, and this liquid multi-strategy fund will give them access to a range of alternative investment strategies in a cost-efficient and dynamic way,” said Heinen.
The fund utilises five underlying alpha-seeking strategies across equities, fixed income and global macro categories, and will be managed by BlackRock's Multi-Asset Strategies team. The underlying strategies will focus on relative value trading approaches and enable the fund to target positive returns in a range of market conditions with a lower risk profile than many traditional ‘long-only’ funds.
“This is a true multi-strategy product, where the performance fees are charged on the aggregate performance of the multiple alpha sources - which makes this product very competitive. We think it is also a huge benefit giving investors a high level of transparency into the portfolio,” Heinen added.
Low yielding fixed income markets, and equity markets near or at historical highs, are driving investors into alternative sources of returns. AIFMD and Solvency II regulations in Europe are also encouraging institutions to allocate more to alternative investments in regulated ‘onshore’ fund structures in a bid to maximize returns and minimise capital charges.
“For many clients trying to manage funding levels and capital ratios, there is no alternative to ‘alternatives’ because they can’t rely on just fixed income or equities. With regulation often limiting the investment universe and choices available to investors, a UCITS solution can be helpful and we expect growth in investor demand to continue,” added Heinen.
Societe Generale Securities Services (SGSS) has launched ManCo by SGSS, a management company solution to assist asset managers seeking access to the European market to set up and market UCITS, reported Hedgeweek this week.
The Directive provides the framework for launching funds within the European Economic Area (EEA) by offering asset managers the opportunity to distribute UCITS funds throughout the area via a compliant management company (ManCo) registered in the EEA. SGSS’ own in-house ManCo is extending its license to accompany asset managers in their growth strategy within the EEA.
By using ManCo by SGSS, asset managers will be able to set up funds remotely, without bearing the associated infrastructure costs or managing the registration process, and outsource to SGSS the entire administrative process required to become UCITS compliant.
ManCo by SGSS is responsible for setting-up and structuring the UCITS, covering all administrative, legal and regulatory requirements, for launch within the EEA region; all regulatory requirements, such as risk management and reporting; all necessary post-trade and fund services; and distribution support through SGSS’ network of local European paying and facilities agency services.
“European investors tend to invest in locally registered funds for asset and investment protection. However, they are willing to explore new investment options to benefit from the advantages provided by a diversified range of funds, as long as they are secure,” commented Etienne Deniau, global head of business development, asset managers & owners at SGSS.
“The regulated UCITS framework is a guarantee of security, both for European and worldwide investors. By enabling asset managers to launch UCITS to investors, ManCo by SGSS will create broader investment and business opportunities for investors and asset managers.”
London-based Fenician Capital Management LLP, a long/short equity manager, is preparing to launch a UCITS-compliant version of its Makalu fund reported EuroHedge this week. The UCITS fund is scheduled to launch on the MLIS platform run by Bank of America Merrill Lynch in mid-July. It is believed to have day one capital commitments of between USD50-60mn. Fenician was established at the end of 2004 by Corrado Abbattista, the former head of proprietary trading at Morgan Stanley. The firm’s other principals include Geoffrey Houlot, a former equities trader at Brevan Howard, and Andrew Crane, who joined as CEO earlier this year from Investcorp where he worked for six years. Crane previously worked at hedge fund consultancy VHC Partners and Fidelity Investments.