James Williams, news editor, Hedgeweek

ESMA publishes final guidelines on UCITS repo agreements, Saudi Arabia’s NCB Capital establishes Dublin-based UCITS platform…

Alternative UCITS funds returned 0.32 per cent in November according to Geneva-based Alix Capital, provider of the UCITS Alternative Index Global. That takes YTD returns to 1.13 per cent. All but three strategies made positive gains last month.

The best performing strategies were UAI Emerging Markets, up 0.73 per cent, UAI Multi-Strategy, up 0.71 per cent, and UAI Macro, up 0.42 per cent. The worst performing strategy proved to be the UAI FX Index, recording losses of 0.24 per cent, closely followed by UAI Commodities, which finished down 0.22 per cent. CTA and Commodities are now, by some considerable distance, the worst performers of 2012, down 4.43 per cent and 3.86 per cent respectively YTD. Event driven is the next worst performer, down 1.84 per cent. By contrast, UAI Fixed Income has produced solid returns of +4.44 per cent YTD.

EEA Fund Management has launched a managed futures fund
reported Citywire Global this week. The Dublin-domiciled EEA Diversified Trends fund, which, as the name suggests, will employ a trend-following strategy to trading futures, is to be run by the firm’s head of trading, Darran Goodwin. Both long and short positions will be built in equity indices, bonds, currencies and commodities using a systematic model developed by Goodwin and his team.

The portfolio will have a bias towards commodities markets, which Goodwin said should differentiate the fund from other CTAs who tend to have a greater bias towards the financial markets. Goodwin said that the non-correlation of managed futures to traditional types of investment “allows the investment adviser to lower portfolio volatility and therefore enhance risk-adjusted returns over the long-term”. The UCITS-compliant fund will mirror the firm’s existing EEA Diversified Program, which launched in 2006.  

NCB Capital, Saudi Arabia’s largest wealth manager, has become the first local institution to establish a non-Saudi registered range of funds on a Dublin-domiciled UCITS platform
reported AMEinfo.com this week; a Middle East business resource site. The firm is preparing to launch its first two funds on the new platform – the NCB Capital Saudi Arabian Equity Fund and the NCB Capital GCC Equity Fund.

The objective of both funds is to generate long-term capital growth by investing in listed companies in the Saudi Arabian and Gulf Co-operation Council (GCC) markets; this is in line with Shariah law. All strategies employed will also be in line with the UCITS regulations. The two Shariah-compliant funds will be marketed globally in partnership with Amundi, which already manages the world’s largest Shariah-compliant suite of funds and the world’s single largest Shariah-compliant fund, with USD3.93billion in AUM.

Jawdat Al Halabi, CEO of NCB Capital
, said that the firm’s local knowledge and “significant presence” meant they were a natural gateway for international access to a dynamic new market. Added Al Halabi: “NCB Capital believes that these new funds will be particularly attractive to investors in Europe and Asia, who have a traditional preference for the regulated structures and strong risk framework that UCITS offers.

Beyond that, Saudi Arabia and the GCC have compelling growth stories with the former enjoying real GDP expansion of 6.8 per cent in 2011, making it a top 20 global economy. We believe that investors will consider these funds as helpful routes to portfolio diversification."

Finally, ESMA (European Securities and Markets Authority) this week published its final guidelines on repo and reverse repo agreements for UCITS funds. The guidelines state that UCITS should only enter into such agreements if they are able to recall, at any time, any assets or the full amount of cash.

Other key points in the guidelines include:

· For reverse repurchase agreements, UCITS should be able to recall at any time the full amount of cash on either an accrued or a mark-to-market basis. However, when cash is recalled on a mark-to-market basis, the mark-to-market value of the reverse repurchase agreements should be used for the calculation of the net asset value of the UCITS; and

· ESMA considers fixed-term repurchase and reverse repurchase agreements that do not exceed seven days as arrangements that allow the assets to be recalled at any time by the UCITS.

The guidelines will now be translated into all EU languages and will be incorporated into ESMA’s Guidelines on ETFs and other UCITS issues, published in July 2012.

“The full set of guidelines will enter into force two months after the publication of the translations. This will result in a comprehensive framework for UCITS that will increase transparency and investor protection and contributes to safeguarding the stability of financial markets,” said ESMA. 

Further reading



Upcoming events

Upcoming training

Mon, 12/05/2014 (All day) - Dubai
Tue, 13/05/2014 (All day) - Dubai