James Williams, news editor, Hedgeweek

OFI Asset Management’s Cohen favours long/short equity funds, UCITS Alternative Index Global ends 2012 up 1.63 per cent…

The UCITS Alternative Index Global, provided by Geneva-based Alix Capital, ended December up 0.50 per cent to leave it with a positive performance of 1.63 per cent for 2012. The UAI Fund of Funds made a gain of 0.45 per cent last month but still finished the year down 1.34 per cent. Five out of the 11 strategy benchmarks posted gains in 2012. The best performing index for 2012 was the UAI Emerging Markets, up 5.87 per cent, closely followed by the UAI Fixed Income and the UAI Multi-Strategy, which returned 4.88 per cent and 4.08 per cent respectively. UAI Long/Short Equity returned +2.70 per cent, with the UAI Macro up 1.88 per cent. By contrast, the worst performing strategy indices for 2012 were the UAI Commodities and CTA, down 5.31 per cent and 3.83 per cent respectively.

Nine out of the 12 UAIX indices (single strategy indices that track and aim to outperform their respective benchmarks) finished in positive territory for 2012. The best performer was the UAIX Emerging Markets, up 8.39 per cent, followed by the UAIX Volatility (+7.61 per cent) and the UAIX Fixed Income Global (+7.54 per cent). The UAIX CTA was the worst performer, down 1.91 per cent. As for December 2012, ten out the 12 indices made positive gains: the best was the UAIX Event Driven, up +.45 per cent, the worst being CTA, which finished the month down 1.44 per cent.    

Morgan Stanley Investment Management this week announced the launch of the Morgan Stanley Investment Funds Global Premier Credit Fund
. The fund invests in “Premier Credit” – the corporate debt issued by companies characterized by dominant franchises or leading industry positions and strong balance sheets to generate attractive risk-adjusted returns. Christian Roth, Global Head of Credit for MSIM, said that with global sovereign debt now under intense scrutiny from investors “we believe there is scope for a product with the potential to provide investors with modest relative returns over the business cycle while protecting them from market pressures and extreme downside moves.”

The long-only fund’s portfolio management team will leverage fundamental research from MSIM’s Global Fixed Income team to identify Premier Credit opportunities as well as employ proprietary quantitative tools to screen the credit universe for high quality corporate issuers. “The Global Premier Credit Fund aims to be an effective strategy to help investors wanting to diversify from government debt, by seeking higher yields through capturing the credit premium of the highest quality credits with limited volatility and default risk,” said Richard Ford, European Head of Credit for MSIM, with Arthur Lev, Head of MSIM’s Long-Only Business, adding: “MSIM’s Long-Only franchise consistently looks to leverage the tremendous depth of our investment teams to introduce new products serving our clients’ needs and demands. The Global Premier Credit Fund displays the capabilities of our experienced investment professionals and builds on the strong momentum in our Global Fixed Income business.” 

Alternative UCITS
manager Frédéric Cohen, lead manager of the OFI Palmares Alpha Drive XL fund – a fund of funds  – plans to double his exposure to long/short equity funds over the next 12 months as OFI Asset Management - a FoF specialist - anticipates a move away from credit, reported Citywire Global this week. Cohen actually doubled the EUR198million fund’s exposure to long/short equity funds in 2012, raising the portfolio’s exposure from 20 per cent 18 months ago to around 40 per cent currently, and said the firm wants to increase the number of long/short funds in the future.

As for the funds he likes currently, Paris-based Cohen named the following: The Luxembourg-incorporated DNCA Invest Miura fund managed by Cyril Freu and Mathieu Picard, the UCITS IV-registered Majedie Asset Tortoise fund managed by Majedie Asset Management’s Matthew Smith and Chris Reid, and the Cazenove UK Absolute Target fund, managed by Steve Cordell. Cohen was quoted as saying: “All of those funds will benefit from a change in market perception,” confirming that these three funds, in addition to the French-domiciled money market fund – OFI Tresor ISR Part C – make up the four biggest positions in the 35-fund portfolio

Alternative UCITS funds currently make up 43 per cent of the portfolio by fund type. Cohen plans to reduce beta exposure in the fund by lowering exposure to convertible bond funds. “We consider there is a huge potential on long-short and alpha strategies, we prefer deploying capital and risk on those strategies rather than on beta strategies which have been very good over the last year.”        

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