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Morgan Stanley announced this week the latest addition to its FundLogic Alternatives plc umbrella - the MS QTI UCITS Fund - in partnership with US-based multi-manager, Equinox Fund Management LLC.
Equinox specializes in building portfolios of multiple CTA programs and currently runs approximately USD2billion of nominal assets. The partnership with Morgan Stanley will give investors exposure to leading CTA strategies. The first product to launch is the MS QTI UCITS Fund, which offers access to a systematic strategy designed by Quest Partners LLC, a New York-based CTA.
David Armstrong, Managing Director and Global Head of Fund and Fund-Linked business at Morgan Stanley, commented: “CTAs have become a key asset class in portfolio construction given their diversification benefits and contrarian behavior in adverse market environments. We are proud to initiate this new development with Quest Partners LLC and look forward to serving our clients through this series of CTA programs.”
Michel Serieyssol, Managing Director at Equinox, added: “Morgan Stanley offers an unmatched combination of top futures clearing, robust infrastructure and rigorous risk monitoring that underpins best-in-class delivery of regulated
managed futures vehicles, both in the U.S. and in Europe.”
Nigol Koulajian, Founder and Portfolio Manager at Quest Partners LLC, said: “We believe our system, designed on the back of extensive research efforts, is a powerful tool to gain access to the performance of long-term trend followers in a completely transparent and efficient manner.”
In other fund launch news, Sturgeon Capital has launched the Sturgeon Central Asia Equities Fund. The UCITS-compliant hedge fund will invest primarily in equities listed on regulated markets with substantial exposure to Central Asia. The fund has selected Credit Suisse to provide custodian and administration services out of Luxembourg, as well as brokerage support. Lemanik Asset Management has been selected to provide risk management and distribution support.
Sturgeon Capital’s chief financial officer, Taco Sieburgh Sjoerdsma, said investors had been asking the firm to create an equity-only strategy focused on Central Asia and was something they’d always considered doing since 2006. “We have been watching local stocks and markets for over 12 months, with a view to launching such a strategy, and in our view this is now an excellent time to do so,” said Sjoerdsma. Commenting on the distribution partnership, Steve Bernat, head of global distribution for Lemanik, said: “We are delighted to partner up with Sturgeon Capital and provide their fund with a robust risk management infrastructure.” He said there were great distribution opportunities for the new fund “as investors are keen on established, well performing managers that can offer niche products”.
London-based investment boutique Newscape Capital Group has also launched its second UCITS-compliant fund this week, reported Citywire Global. The Dublin-domiciled Newscape Diversified Growth Fund will use the firm’s existing risk management and portfolio construction techniques used on its Model Portfolio Services, which it has been running for clients since 2009. The new multi-asset fund will invest in a range of asset classes including equities, bonds, currencies and use some hedging instruments. Target annualised returns are 7 per cent. Richard Bonnor-Moris will oversee portfolio construction in the fund and risk, while head of fixed income Charlie Kerr and company CIO Philippe Bonnefoy will oversee allocations.
The Alternative Investment Management Association (AIMA) has called for the creation of a UCITS depositary “passport” in its latest paper on the proposal for a UCITS V directive. AIMA said that institutions authorised by one EU country to act as a UCITS depositary should be granted automatic rights to provide the same services across all 27 EU member states. This logic follows that of the Management Company Passport (MCP) under UCITS IV, whereby any UCITS fund registered with an EU country can be marketed across all other EU member states. A similar funds passport will be available to alternative investment fund managers under the AIFM Directive.
AIMA said a UCITS depositary passport would allow for cross-border provision of depositary services. In the paper, they also call on the European institutions to align UCITS depositary regimes and remuneration requirements with those of the AIFM Directive, which will be implemented in July 2013. Another of AIMA’s recommendations is that the list of eligible assets in which a UCITS fund can invest should be expanded to include commodity derivatives.
Andrew Baker, AIMA’s chief executive, commented: “As our position paper makes clear, we believe that the time has come for a proper discussion about introducing a depositary passport. Such a passport would bring more competition and more choice for managers and investors and would remove a significant barrier to the single market. Without it, there is a risk of a lack of competition in the depositary space and increased systemic risk as a result.”
Companies like BlackRock are avoiding the use of cross-border UCITS master-feeder structures because of fears it would risk losing clients and face distribution and operational challenges reported the Financial Times this week, based on an article that appeared on Ignites Europe, an FT service. BlackRock joins a growing list of asset managers including T Rowe Price and Amundi, who have raised concerns about the cost and complexity of establishing master-feeders.
Stephen Crocombe, head of EMEA product development at BlackRock, said that fund of funds, a major client group, cannot invest into feeders and that therefore the firm had “no plans to use [cross-border master-feeders] at the moment”. Adam Fairhead, global head of product development at HSBC Global Asset Management, also said that the “fund of fund issue” was one of the reasons why they had no plans to do UCITS IV master-feeders yet. “If you launch a UCITS feeder fund, fund of fund clients can’t invest any longer, which is usually quite a problem,” Fairhead was quoted as saying.
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