James Williams, Hedgeweek

State Street to provide servicing solutions to EARNEST Partners… SYZ & Co launches OYSTER Flexible Credit fund…

Mon, 23/06/2014 - 10:18

State Street Corporation announced this week that it was expanding its relationship with EARNEST Partners to provide a full suite of servicing solutions for the firm’s new UCITS funds.

EARNEST Partners, which currently advises on more than USD20bn in assets for clients around the world, will now offer global access to its equity strategies through its Irish domiciled UCITS funds, including global emerging markets, frontier markets and global ex-US equities.
 
State Street currently provides support for EARNEST Partners’ onshore funds. As part of the expansion of its current servicing relationship, State Street will now also provide asset management services (AMS) and Key Investor Information Document (KIID) solutions as well as support for provision of past performance and document collation.
 
Gavin Nangle, head of the asset manager solutions team in Ireland at State Street commented: “This UCITS partnership and State Street’s related best of breed products and services will help support EARNEST Partners as they expand their offshore fund offerings.”
 
Paul Viera, founder and chief executive officer of EARNEST Partners said: “We have seen increasing interest from investors for offshore opportunities, so this extension of our relationship with State Street enables us to meet this demand. The UCITS structure provides important investor protection, regulatory and disclosure characteristics, which, combined with State Street’s extensive experience in the area, make these funds an attractive prospect for investors.”
 
Brown Brothers Harriman is to provide full service support for Lord Abbett's newly launched, Irish-based Ucits platform, including passive currency administration reported WatersTechnology this week. Joan Binstock, partner and COO at Lord Abbett, said:
"Selecting the right service provider and partner was one of the most important decisions we made. In the end, it came down to BBH’s global enterprise and their track record of successfully servicing Ucits products for their clients. We’re delighted to work with them on this launch.”
 
Seán Páircéir, partner at BBH, added: “Lord Abbett’s ability to grow its Ucits product so quickly is testament to the reputation they have built over the years as a successful U.S.-based asset manager. Europe continues to be an integral part of our strategy, and we look forward to supporting them in all facets of their Ucits business."
 
Maitland has received approval from the Luxembourg regulator (CSSF Luxembourg) for its Alternative Investment Fund Manager Directive (AIFMD) compliant management company and specialised investment fund reported Hedgeweek.
 
MS Management Services, a Luxembourg-based subsidiary of the Maitland group, has been authorised by the CSSF to act as an alternative investment fund manager (AIFM) to third-party alternative investment funds (AIFs) as well as to the new Maitland AIF platform, MS SICAV SIF.
 
MS SICAV SIF is a multi-compartment specialised investment fund established under Luxembourg law, which has the requisite regulatory approval, constitutional documents, service providers and legal agreements in place. MS SICAV SIF provides alternative fund manager clients with the facility to set up their own-branded sub-funds on the platform allowing them to market and distribute to professional investors in the European Union and beyond while complying with the AIFMD.
 
Fund managers that are affected need to apply for authorisation to operate as an AIFM by 22 July 2014.
 
MS Management Services will offer fully compliant AIFMD management company services encompassing the following:
 
·        Authorisation as an AIFM
·        Governance
·        Operational substance
·        Investment management services
·        Administration services
·        Reporting under AIFMD
·        Oversight of all delegated functions
 
Director of MS Management Services Kavitha Ramachandran said: “We are pleased to offer clients a simplified solution which removes the administrative burden. Through Maitland’s Luxembourg manco, fund managers now have access to a comprehensive platform for product construction and innovation in the EU and beyond.”
 
Finally this week, Swiss banking group SYZ & CO has launched OYSTER Flexible Credit, a new sub-fund of its Luxembourg Sicav. The fund follows a credit strategy that seeks to combine European corporate bonds with flexible market exposure hedging.
 
The annualised return objective is eight per cent with a Sharpe ratio of one over a whole credit cycle.
 
Management of the fund has been entrusted to Eiffel Investment Group, a Paris-based management company specializing in these strategies.
 
The European corporate bond market is expanding fast but remains highly fragmented. There are more than EUR2.2tn worth of corporate bonds and loans outstanding. Growth is strong since a record EUR90bn worth of new high-yield bonds were issued in 2013, about 30 per cent of which were from new entrants. This expansion is likely to continue because the trend towards disintermediation is only just beginning in Europe, with 70 per cent of credit still provided by the banks, compared to just 30 per cent in the US.
 
Constructed according to a "bottom-up" approach, the portfolio will hold between 30 and 40 positions in credit instruments of European companies and financial institutions, placing the emphasis on special situations. Using in-depth fundamental analysis, the manager seeks to identify loans that have been inaccurately valued or poorly understood by the market.
 
The main drivers of alpha generation are the special situations for which a triggering factor is identified. They make up the core of the portfolio, along with paper offering an excess return (“carry”), undervalued securities (“value”) and short-term trading in special cases. Net exposure to the credit market may vary between -25 per cent and 150 per cent, enabling the fund manager to protect capital in periods of stress but also to amplify gains during buoyant markets.


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