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James Williams, Hedgeweek

Global pension plans expected to account for large share of UCITS sales going forward… Schroders launches Strategic Beta Fund

BNP Paribas Securities Services has been mandated by Hwang Investment Management, Malaysia’s largest independent asset manager, to provide services to four UCITS funds reported this week.

HwangIM has appointed BNP Paribas for global custody of their flagship Asian Series portfolio, which is expected to launch in January 2014, as well as fund administration, transfer agency, investment risk and performance reporting and trustee services.
Distributors have access to trade services and local support during Asian working hours via BNP Paribas’ Singapore window, while the bank’s local team leads the client service relationship. Esther Thye, chief sales officer at Hwang Investment Management, said: “We selected BNP Paribas based on their expertise in cross-border fund distribution. We believe their solutions would give us a competitive edge that would help to underpin our expansion plans in Asia and Europe.”

Mostapha Tahiri, head of BNP Paribas Securities Services Singapore, who is also the bank’s Asia head of asset and fund services, added: “Hwang joins a growing number of South East Asian asset managers using our Singapore client window for a full suite of services including UCITS distribution support. Our local team of specialists work closely with their European counterparts to build a strong East-West industry knowledge base, and we look forward to helping HwangIM to advance their distribution abroad.”

Research suggests that even though the number of alternative UCITS funds that have either shut down or merged has doubled over the past 12 months, the number of fund launches have managed to keep pace. As reported by Citywire Global, the firm’s head of investment research, Jonathan Miller, said that the alternative UCITS universe totaled 601 funds at the end of June 2012. Fast forward 12 months and the industry has experienced relative stasis with 600 funds in operation as of end-September 2013. This is despite the number of fund closures rising from 73 through end-June 2012 to 150 over the past 18 months.

Miller was quoted by Citywire Global as saying: “This shows us that the launches are happening in tandem with the fund closures. What we are seeing is quite a lot of funds have made it to the three year track record and held up their hands and said performance has been pretty awful for us and left. This has led to more compelling funds staying in existence.

An industry survey published on behalf of Citi Securities and Fund Services suggests that the global pensions market is expected to account for the largest share of new UCITS fund sales going forward, reported international-adviser this week. Despite the turmoil in recent years, Europe is seen as a more important market for future UCITS growth than Asia or Latin America pension plans. The findings were discussed at the recent Association of the Luxembourg Funds Industry conference in Luxembourg by Citi’s Peter Salvage, who noted that many in the industry believe that the alternatives space will be one of the biggest future growth areas for UCITS.

Salvage, who is head of Alternative Investment Services EMEA for Citi Securities and Fund Services, was quoted as saying: “This survey is really trying to get to the heart of what is happening in the Alternative Investment Fund Manager Directive space. What are some of the key business [decisions] people will need to make, and how are they going about that – in terms of domicile, in terms of [choosing] a depositary, and in terms of where the growth is going to come from.” According to the survey, 77 per cent of the 100 people interviewed from 82 global companies think that pensions will fuel the “next leg of growth” of UCITS funds, with 71 per cent believing that growth in alternative UCITS would also be important. Approximately 60 per cent of respondents thought Europe would drive the growth of UCITS going forward, with one third believing both Latin America and Asia would be important markets. 
Schroders this week announced the launch of its Strategic Beta Fund, an innovative multi-asset fund that aims to deliver stable performance in a variety of market environments. Strategic Beta is managed by Matthias Scheiber, Multi-Asset Fund Manager, and is designed to target a return of sterling cash plus 3 per cent per annum over rolling five-year periods. Scheiber commented: “The Strategic Beta Fund uses our Multi-Asset philosophy of building portfolios that focus on risk allocations. It benefits from a balanced exposure to economic growth, inflation and defensive assets, as well as strategies that capture behavioural and other market inefficiencies.

Mark Humphreys, Head of UK Strategic Solutions, added: “Pension schemes are looking for ways to generate growth above their liabilities without taking on too much risk. The Strategic Beta Fund’s diversification across a number of risk factors should help to smooth the path of returns for investors, and its active approach provides flexibility to generate stable returns under different market conditions. 

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