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Alternative UCITS long/short equities edged ahead of their hedge fund counterparts in 2012… Morgan Stanley adds forth CTA manager to FundLogic Alternatives platform…

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Bank of America Merrill Lynch has added New York-based manager Van Eck to its dedicated UCITS compliant fund platform, Merrill Lynch Investment Solutions (MLIS).

The new vehicle is called the Van Eck Commodities Long-Short Equity Ucits Fund. Van Eck is an industry stalwart having been founded way back in 1955. It specializes in natural resource equities and commodities, as well as emerging markets. The firm presently has over 150 employees, with offices in Germany, Switzerland, China and Colombia. 

The fund seeks to leverage Van Eck’s hard assets investment team’s knowledge of the natural resources sector – including experience as geologists and engineers – to conduct bottom-up, fundamental research and evaluate underlying risks and opportunities.

The fund attempts to generate alpha through the pairing of its macro views – supported by commodity price projections and industry trend analyses – and on-the-ground company analysis.

Philippe Lopategui, head of the alternative investments funds platform and global financing solutions at BoAML, said: “We are delighted to welcome a partner of the quality of Van Eck. The launch of this Commodities Long-Short Equity Ucits Fund continues the investment in the MLIS offering, providing investors with even more choice of alternative investment strategies across our platform. Van Eck has an industry-leading team in the hard assets investment group, and we are excited to be able to bring their expertise to bear in the Ucits arena.”

Jan van Eck, president and director at Van Eck, added: “We are pleased to be working with Bank of America Merrill Lynch to bring this strategy to the Ucits market. Van Eck has managed long-short hard assets strategies for over 15 years and has one of the largest teams dedicated solely to hard assets equity investing.  With Bank of America Merrill Lynch’s extensive reach we will be able to offer investors an attractive alternative in the natural resource equity space. It’s a great partnership.”

As the battle of the platforms continues, it was also announced this week that Morgan Stanley had launched a UCITS fund providing exposure to Mesirow  Financial’s Absolute Return Plus Strategy on its FundLogic Alternatives Plc platform. The name of the new fund is the MS Discretionary Plus UCITS Fund and is the last in a series of four CTA strategies to be made available to investors in a UCITS format through Morgan Stanley’s partnership with US-based multi-manager, Equinox Fund Management LLC. The firm specializes in constructing portfolios of multiple CTAs.   

“We are proud to provide UCITS investors with access to the Mesirow Absolute Return Plus Strategy, established by Tom C. Willis, an acknowledged market leader in the industry with over 30 years trading experience,” said Alvise Munari, Managing Director and Global Head of Equity Derivatives, Sales and Financial Engineering at Morgan Stanley. 

Mesirow Financial has over USD65billion of assets under management for all asset classes. The strategy, which aims to maintain a minimum exposure of 75 per cent to commodities, seeks to identify two or three macro themes which are then expressed through futures contracts. By also limiting the amount of risk per trade, the strategy aims to generate consistent returns with low volatility in both rising and falling markets.

Tom Willis, Senior Strategist and Portfolio Manager of the Mesirow Absolute Plus Strategy said: “The strength of our Strategy is our seasoned investment team, our disciplined risk management process with an emphasis on capital preservation, combined with a targeted high percentage of profitable trades, on a high win/loss ratio. The Strategy seeks to avoid portfolio concentration on multiple levels, including price, concentration, time, and trade structure, ensuring a strong strategy all around.”

Added Aaron Ochstein of Mesirow: “Morgan Stanley is a market leader in the UCITS Alternatives space, with one of the fastest growing platforms, high-end risk management and operational expertise. We are delighted by this opportunity to partner with both Morgan Stanley and Equinox, in providing access to the Mesirow Absolute Return Plus Strategy to UCITS investors.”

New research by Citywire Global reveals that long/short strategies within the alternative UCITS space edged ahead of the overall hedge fund universe in 2012, with average returns of 5 per cent. Their research shows that by the halfway point last year, investors actually started to move away from long/short strategies and more into areas such as credit and volatility trading. The second half of 2012 was also a period of consolidation, suggesting that some fund strategies had run out of steam. Of the 112 funds that have shuttered since Citywire launched its database, 80 per cent took place in 2012, with currency, global macro and long/short equity strategies being most affected. 

However, just as many new funds have launched as they have closed, maintaining parity in the alternative UCITS space. It is believed that those funds which ceased trading were at the smaller end of the scale, meaning their disappearance has had minimum impact on overall AUM. Indeed, since January 2012 the sector has attracted net inflows of approximately EUR7.5billion. But whereas hedge fund AUM remains more constant, the fact that UCITS funds offer better liquidity terms inevitably means that net outflows are more pronounced during periods of heightened market risk. This makes for a more volatile AUM profile than its equivalent offshore counterpart.    

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