James Williams, news editor, Hedgeweek

UCITS enjoy EUR41billion in net inflows in October, EU national authorities have two months to comply with ESMA’s consolidated guidelines…

Newedge announced this week that it had been appointed as swap counterparty to two new UCITS funds under the Nuveen Global Investors Fund plc umbrella. Both funds are Dublin-domiciled and UCITS-IV compliant.

They are managed by Gresham Investment Management LLC, an affiliate of Nuveen; one of the world’s largest commodities investment managers. Andrew Dollery, Director, Origination & Structuring for UCITS funds at Newedge, said the firm was excited about working with a manager of Gresham’s pedigree and that “today’s announcement is further recognition of our ability to offer clients innovative UCITS-compliant services”. Added Dollery: “Nuveen’s decision to bring one of the leading US commodity managers into UCITS is further validation of the important role regulated onshore investment products now play in the alternative investment community.”

“We are delighted to partner with Newedge as the swap counterparty to these funds as their expertise helps facilitate our ability to offer investors exposure to Gresham’s Tangible Asset Program in a UCITS-compliant format,” commented David Levi, Nuveen Investments Managing Director for Global Business Development.    
 
Pimco has launched a UCITS version of the USD19.3billion Pimco Income Fund in Ireland reported International Adviser this week. The Pimco Funds Global Investors Series Income Fund officially launched 30 November and is co-managed by Daniel Ivascyn and Alfred Murata. Ivascyn also manages the US mutual fund portfolio. The new Dublin-domiciled fund sits under Pimco’s Global Investors Series umbrella. It will follow the same investment objective as the US mutual fund, which is to maximise current income along with long-term capital appreciation.
 
Average duration of the securities held in the portfolio will be between two and eight years, with both managers using a global multi-sector strategy that relies on both bottom-up and top-down market analysis. Currently, 54 per cent of the US mutual fund’s portfolio is exposed to mortgage-backed securities, with 26 per cent being held in non-agency MBS. The US fund, which launched in March 2007, is up 17.59 per cent through September this year and has returned 11.12 per cent since inception.
 
National authorities of EU Member States have two months to inform the European Securities and Markets Authority (ESMA) whether they intend to comply with its consolidated guidelines on ETFS and other UCITS issues reported Securities Lending Times.
 
The consolidated guidelines were merged with ESMA’s guidelines on repo and reverse-repo agreements, which, as Hedgeweek reported, were published last week. The guidelines come into effect at the end of the two-month notice period. The guidelines on repo and reverse-repo activity by UCITS funds were published in their final form on 4 December 2012.
 
Under these guidelines, UCITS funds should be able to recall assets subject to repo arrangements at any time and that all fixed repo and reverse-repo agreements do not exceed seven days: not a problem for most UCITS given that such agreements tend to be used on an overnight basis.   
 
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 earlier this month.
 
Finally, UCITS enjoyed a surge of EUR41billion in net inflows in October according to the latest report published by EFAMA. This compares to net outflows of EUR10billion in September. Long-term UCITS jumped from EUR13billion in September to EUR34billion in October but the more significant net inflow increase was seen in bond funds: EUR25billion compared to EUR9billion in September. Equity funds also saw a modest net inflow of EUR3billion. The report found that total net assets of UCITS 0.4 per cent in October to EUR6.249trillion.
 
Bernard Delbecque, Director of Economics and Research at EFAMA, commented: “The reduction in uncertainty regarding the future of the euro area, in an environment of gloomy growth prospects and subdued inflation, supported the net sales of bond funds in October. At the same time, the demand for equity funds remained modest, suggesting that investors stay very sensitive to stock market risk.”   

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