James Williams. Hedgeweek

CSSF issues new circular on UCITS depositaries… Lombard Odier Investment Managers launches US equity long/short fund…

UBS Asset Management has added its Xtra Yield strategy to the firm’s Luxembourg-domiciled SICAV by a launching a UCITS compliant version of the fund reported Citywire Global this week.

Investors can choose from four different strategies in the UBS Strategy Xtra Fund range: Fixed Income, Yield, Balanced, Growth. In addition to fixed income and equities, the Xtras also invest in hedge funds to enhance diversification and broaden the set of investment opportunities. The UBS (Lux) Strategy Xtra Yield (Ucits) fund will be run by Robert Hellstrand who manages the existing UBS (Lux) Strategy Xtra SICAV – Yield fund, which launched in 2004 and was, until now, only available to Swiss investors.

Investors appear to be favouring multi-strategy funds according to the latest ML Capital Alternative UCITS Barometer for Q3 2014. According to the report, there has been a near five-fold increase in these funds compared to Q2. Almost half (47 per cent) of respondents said they were looking to allocate to the space whilst keeping a “cautious eye on the relatively highly priced equity and bond markets”.

The report also noted that investor interest in US long/short equity funds was the highest it had been since the inception of the Alternative UCITS Barometer. “Furthermore, whilst UK Long Short slides out of favour, 51 per cent of respondents plan to increase exposures to Global Long Short funds”, said the report. The final key takeaway was that Q3 was showing renewed interest in Emerging Markets: “Our research has highlighted that there is emphatic support for Globally diversified funds (39 per cent) as opposed to the more targeted regional products,” wrote ML Capital.

Lombard Odier Investment Managers, the asset management arm of the Lombard Odier Group, has launched the LO Funds - Fundamental Equity Long/Short fund: a US equity long/short fund. The fund will leverage five US-based sector teams covering consumers, industrials, TMT (Technology, Media, Telecoms), healthcare and energy using a bottom-up fundamental approach to stock picking. Overseeing the fund will be CIO Steve Bulko who was quoted as saying: “Investors want managers who can generate returns across market cycles. An absolute return approach, we think, is the best way to achieve this because a portfolio manager can go both long and short. Our new Ucits offering assembles a team of experienced, US-focused equity managers, who we believe can deliver this absolute return profile to our investors."

In anticipation of the European Parliament and European Council’s provisions relating to UCITS with respect to depositary functions, Luxembourg’s regulator the CSSF has released a new circular according to a briefing note provided this week by law firm Arendt & Medernach for The Lawyer. The aim of the circular is to clarify the provisions applicable to Luxembourg credit institutions acting as depositary for UCITS. Departing from a principle-based approach, the CSSF has enacted more prescriptive and detailed rules to govern UCITS depositary functions with Arendt & Medernach noting:
 
“The objective of the circular is to define new organisational requirements to be put in place at the level of the Luxembourg depositaries as well as at the level of the UCITS in terms of their role, duties and obligations concerning UCITS depositary functions. The current non-written requirements imposed by the CSSF in relation to the approval of a depositary have now been clearly stated in the circular with specific rules in terms of heads of business lines, separation of conflicting functions from a hierarchical and functional perspective and adequate human and technical means to be put in place, for example.”

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