James Williams, news editor, Hedgeweek

Newedge chosen as swap counterparty by NEF Asset Management, UCITS attract EUR36billion in net inflows for November…

Pictet Asset Management (PAM) announced this week that it has broadened its range of emerging market bond funds with the launch of the Pictet-Emerging Corporate Bonds fund. PAM managed GBP86.6billion in assets as of 30 September 2012 and is part of the Geneva-based Pictet Group, one of Europe’s leading premier independent asset management specialists. The new fund invests in the fast-expanding EM corporate bonds asset class and seeks to outperform the JP Morgan CEMBI Broad Diversified by 2 per cent per annum over a 3- to 5-year period (gross of fees). And investor interest in EM debt certainly seems strong: since the fund officially launched in November 2012 it has attracted more than USD600million in assets.

Alain-Nsiona Defise is the fund’s portfolio manager. Defise joined PAM from JP Morgan last year, where he headed up its emerging corporate business. “Emerging markets corporate bonds offer investors a different way to benefit from attractive yields and strong fundamentals from companies based in emerging markets. With nearly 70 per cent investment grade bonds and with default and recovery rates comparable to other asset classes, emerging markets corporate bonds are safer than investors might think,” commented Defise. The UCITS-compliant fund is part of the Pictet Luxembourg SICAV.

In another fund launch this week, Morgan Stanley announced it had partnered with Quantitative Investment Management to add a new CTA fund to its FundLogic Alternatives Plc umbrella – a dedicated UCITS platform. This is the second in a series of four CTA strategies to be made available to investors in a UCITS format through the bank’s partnership with Equinox Fund Management, a US-based multi-manager that specializes in constructing portfolios of multiple CTAs. The first fund – MS QTI UCITS Fund – was launched 24 October 2012. David Armstrong, Managing Director and Global Head of Fund and Fund-Linked business at Morgan Stanley, said the bank was “thrilled” about its collaboration with QIM, the world’s largest non trend-following CTA regarded for its short- to medium-term expertise in trading managed futures. 

“QIM’s edge lies in its ability to capitalize on market inefficiencies in global equities and futures markets using proprietary statistical learning techniques to deliver outstanding risk-adjusted returns. We believe their numerous quantitative analysis and predictive technologies coupled with their systematic trading models…and robust risk management offers a very unique positioning and set of competences to investors in search of diversification,” said Armstrong

“We look forward to this new venture with Morgan Stanley, whose platform has led the pace with its ambitious plan in the CTA UCITS space,” added Jaffray Woodriff, chairman and CEO at QIM. “
We apply sophisticated risk management procedures and continually seek improvements to the models in our trading strategy.We select only those models that prove to be the most statistically significant and conceptually diverse for actual trading, with the hope of providing reliable predictive signals that offer an investment edge and generate significant alpha over time.”

UCITS registered net inflows of EUR36billion in November 2012 reported the European Fund and Asset Management Association
(EFAMA) this week. This figure is down slightly on the EUR41billion in net inflows recorded for October but nevertheless indicates that demand for UCITS remains strong among investors. Net sales of long-term UCITS (UCITS excluding money market funds) rose slightly to EUR36billion in November from EUR34billion in October. A major contrast was seen in equity funds; they attracted EUR13billion in net inflows, a considerable increase on EUR3billion recorded in October. Bond funds, predictably, were slightly down at EUR19billion (compared to EUR25billion). That still made them the single largest contributor to inflows, however.    

Total net assets of UCITS increased 1.1 per cent in November, taking them to EUR6.316trillion. Commenting on the figures, Bernard Delbecque, Director of Economics and Research at EFAMA, said: “
Net inflows into bond funds remained the largest contributor to total net sales of UCITS in November. Thesubstantial volume of net sales of equity funds was largely due to the transfer of some insurance company assetsinto UCITS.” 

Finally, Newedge, a multi-asset prime broker which also provides execution and clearing services, announced that it has been chosen as swap counterparty to the NEF Blue Mountain (GMTI) Fund and NEF Nordic Power Index Fund. Both funds are Dublin-domiciled and UCITS-compliant. NEF Asset Management is a Norway-based fund manager that specializes in commodities and the Nordic power market. Andrew Dollery, Director, Origination & Structuring for UCITS funds at Newedge, said that through the firm’s Nordic Power Index Fund, NEF was bringing a “unique and interesting product” to the UCITS investment community.

“We are excited about working with NEF, one of Scandinavia’s leading alternative investment managers. Today’s announcement is further recognition of our ability to offer clients innovative UCITS-compliant services.” 

Alexander Troxler Aarøe, Investment Director, NEF Asset Management
added, "We are delighted to appoint Newedge as swap counterparty to these funds. For the first time, we are able to offer investors exposure to our trading strategies in a UCITS-compliant format. We believe the products will add important diversification benefits to many traditional investor portfolios.”

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