Last year saw Merrill Lynch Investment Solutions (MLIS), BAML’s industry leading UCITS platform, onboard a number of key fund managers, most notably York Capital and Graham C
Last year saw Merrill Lynch Investment Solutions (MLIS), BAML’s industry leading UCITS platform, onboard a number of key fund managers, most notably York Capital and Graham Capital. It was a strong end to the year. And when Hedgeweek spoke to two of its principal architects this week, James Orme-Smith, Head of synthetic equity sales and Eric Personne, Co-Head cross-asset retail distribution and Head of equity and fund restructuring, they outlined some of their plans for 2011. Orme-Smith, who joined BAML in October 2010 from Deutsche Bank, works in tandem with Personne and his team to identify and select the right managers and strategies for the platform. “We only want to partner with the best managers,” said Orme-Smith. As more fund managers join the newcits universe, the market is becoming Darwinian in its evolution. “Only the good funds will successfully raise assets in a UCITS wrapper,” said Personne, adding that he was largely bullish on the market since the benefits of UCITS funds clearly outweigh the costs. Orme-Smith concedes that many of the trends from some time ago, namely dissatisfaction with beta performing funds, liquidity concerns etc, still ring true with institutional investors today. But despite the plethora of newcits available to them, they’re very exacting in which to invest in. “Managers looking to just roll out a UCITS fund for the sake of it will fail. Many at USD10million will stay there because they’re only delivering beta returns and investors will not pay the fees,” explained Orme-Smith.
Unsurprisingly, Personne has set the platform’s AUM bar high for 2011. “Our target is USD4billion to USD5billion this year,” said Personne. Although ambitious, two factors will be critical in its success: “Firstly, originating the best managers and secondly by investing in our sales team in Q1,” added Personne. When asked whether the US market was a key focus, Orme-Smith replied: “Unequivocally yes. We’ve just launched a US-based fund with north of USD30million in AUM and if you look at our pipeline there’s a skew towards US managers.” As to the potential of newcits in Asia, Orme-Smith believed it was “perhaps one step behind”. Less than 5 per cent of the platform’s assets come from Asia and Personne agreed that whilst there were some good Asian-based managers being selected for the platform, “our energy in asset raising right now is focused in Europe”.
