James Williams, news editor, Hedgeweek

HSBC settles Dublin lawsuit, Paris-based UCITS fund accelerates into automotive stocks, Signet Group launches high income bond platform…

The automotive sector is revving up interest with fund managers such as Paris-based Charles-Henri Neme, whose EUR400million Exane Funds 1 – Ceres A fund is targeting automotive stocks to increase cyclical exposure and piggyback on emerging market growth trends reported Citywire Global this week.

Neme said that the absence of automotive stocks in the long/short equity strategy was an anomaly “that needed to be corrected”, admitting that the fund was a little “too defensive”. “This posed problems in certain market rebound phases, as the cyclicals at our disposal – television, temporary staffing, hotels etc – were often too small to allow rapid maneuvering. The automobile sector obviously adds much more liquid cyclical companies,” Neme was quoted as saying.
 
He added that another reason to increase exposure was because of German economic strength and Chinese consumer spending. Given that the fund is already highly exposed to China through luxury goods, Neme said it would be interesting to examine China “from two points of view rather than just one”. The decision to add Volkswagen to the portfolio in September has paid early dividends, having contributed 27 basis points to performance in October, Neme confirmed.  
 
Fund managers are outsourcing more back office administration functions to third parties in response to rising European regulation reported FT Adviser. According to research by service provider Kneip, 32 per cent of 130 fund management surveyed were planning to outsource back office functions in the next 12 months. That’s a near 100 per cent increase on last year’s figure of 18 per cent. One of the key factors driving managers towards outsourcing was UCITS funds regulation, in particular the production of key investor information documents (KIIDs), a simplified fund prospectus that all managers must now publish and update regularly. Mario Mantrisi, chief strategy and research officer at Kneip, was quoted as saying: “While the reporting requirements of regulations such as UCITS IV and V are helping to ensure greater transparency…they are also taking up a large amount of fund managers’ time, diverting them away from core business activities.”   
 
UK-based Signet Group, a fixed income investment specialist, has rolled out a platform of liquid, geographically focused high-income bond portfolios reported Investment Europe this week. The Signet High Income Series sits on the firm’s Dublin-domiciled UCITS IV platform. It targets returns of 6 to 10 per cent annualised over a full market cycle. The platform will initially focus on four distinct investment programs: an Asian bond portfolio; a US high-income bond portfolio; a European high-yield bond portfolio, and Russia/CIS (Commonwealth of Independent States) bond portfolios. A global portfolio – Signet High Income Portfolio (SHIP) – is also available on the platform.
 
Income Partners Asset Management (HK) Ltd, an independent specialist Asian debt manager, will manage the Asian portfolio. Handling the European portfolio will be Butler Investment Managers Ltd, a European fixed income specialist. In the States, Feingold O’Keeffe Capital LLC will seek to exploit credit inefficiencies and income opportunities in US corporate bonds and senior secured loans. Sberbank Asset Management is to manage the Russia/CIS portfolio. Commented Robert Marquardt, chairman and co-CIO of the Signet Group: “Our purpose in introducing the High Income Portfolios in a Zero Interest Rate Policy [sic] world is to explore the corners of the credit markets which remain inefficient while delivering attractive positive returns through yield capture and active portfolio management.”  
 
Patrick Goebel has joined international law firm Dechert’s financial services and investment management group as a partner in Luxembourg, reported Hedgeweek this week. Goebel, who comes from Allen & Overy, advises on all types of retail and private Luxembourg investment vehicles including UCITS, private equity funds, hedge funds, real estate funds, and funds investing in a variety of non-financial assets.  Before joining Allen & Overy Luxembourg, Goebel had been with Banque Générale du Luxembourg since 1999 (today BGL BNP Paribas) where his last position was as head of fund engineering within prime fund solutions.

Commenting on his appointment, Goebel said: “I am excited at the opportunity to join Dechert's pre-eminent international investment funds practice and to be part of its growing presence in the Luxembourg market. No other firm comes close to offering a more compelling platform for my practice.” Peter Astleford, co-head of Dechert’s global financial services practice, said that Goebel’s appointment “further strengthens our Luxembourg offering”. 
 
Finally, HSBC Holdings Plc have settled a lawsuit in Dublin in relation to millions of losses incurred by a fund that invested with Bernard Madoff, reported Bloomberg this week. The case involved Kalix Fund Ltd, who sought USD35.6million from the bank. Kalix said that as custodian the bank was responsible for safeguarding monies held in Thema International Fund Plc; a UCITS-compliant fund that invested with Madoff. HSBC faces more than 50 complaints in Ireland, including from Thema itself, for allegedly failing in its duties to the fund and its investors.
 
Kalix was the first case to reach trial in Ireland but others might potentially pursue claims, with Paul Kennedy, a lawyer at Dillon Eustace, quoted as saying that the settlement “may be a first step towards the resolution of those cases. It will be up to the parties as to how all of that litigation proceeds.” A HSBC spokesperson said in an email that the bank had reached an “amicable settlement” with Kalix. 

 

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