Fund Times: 1 - 5 March
JP Morgan launches Brazil Investment Trust; Old Mutual to launch UK Absolute Return Fund; Evercore announced the launch of funds-of-ETFs; Mandelson wants debate on fund manager remuneration; Changes at Nevsky and GLG hedge funds.
JP Morgan has announced it will launch the JPMorgan Brazil Investment Trust. It will be managed by Sebastian Luparia and Luis Carrillo who will utilise a bottom-up stock selection approach. The portfolio wioll hold 25-50 stocks which may differ significantly from the benchmark MSCI Brazil 10/40 Index. JPMorgan points to Brazil's rising public and private sector investments and the nation’s solid performance through the credit crunch as evidence that now is a good time to launch the product. Morningstar can see the appeal of trusts such as this for investors who want specific exposure to the country. However for the majority of retail investors, we believe an offering that covers the broader emerging markets regions is likely to be a better choice.
Old Mutual to launch UK Absolute Return
The launch of Old Mutual Mutual UK Specialist Absolute Return was announced this week, to be managed by Luke Kerr. It will be a Dublin-domiciled UCITS III fund, using the same strategy as the Cayman-domiciled UK Specialist Equity hedge fund, also managed by Kerr. It will invest primarily in UK equities outside the FTSE 100. The performance of absolute return funds was extremely varied through the credit crunch. Many funds were unable to achieve their absolute return targets, or even delivered negative returns. Meanwhile others did well, maintaining solid absolute returns while long-only funds delivered negative performance. Before considering an absolute return fund, investors need to understand how it intends to try to achieve its target return, how much they will pay for the fund, and whether the manager has the experience and resources necessary to achieve the fund’s goals.
Evercore announced the launch of funds-of-ETFs
Evercore Pan Asset Capital Management has announced the launch of two funds investing in ETFs: Pan Dynamic Balanced and Pan Dynamic Growth. The main focus of the funds will be asset allocation, with ETFs providing a low-cost way of accessing the various asset classes. Evercore estimates the TERs will be 1.1% - low compared to most active funds, but higher than the typical cost of investing directly in a passive portfolio ETFs. The worth of the funds will therefore come down to whether Evercore’s asset allocation decisions are good enough to outperform the additional fees.
Mandelson wants debate on fund manager remuneration
Business Secretary Lord Mandelson said this week that he would like to see a debate on whether fund managers should be forced to disclose their pay terms and incentives and encouraged to hold investments for the medium term. Morningstar has often pointed out the importance of transparency, and we greatly prefer funds where the remuneration structure helps to align manager’s interests with those of investors. In many overseas markets compulsory disclosure is stricter than in UK and European markets, so a debate in this area could benefit investors.
Changes at Nevsky and GLG hedge funds
Both GLG and Nevsky announced the pending departure of personnel this week. Nevsky Capital's Martin Taylor and Nick Barnes will give up duties on the firm's flagship emerging markets hedge fund but will continue in the role for 12 months. Meanwhile Jason McCay, co-head of GLG’s UK team will leave at the end of 2010. None of the personnel have said they will be moving to a rival – in fact they intend to continue their associations with the respective firms, but with a change in responsibility.
Morningstar qualitative ratings and reports issued this week
Morningstar issued new qualitative ratings and reports on a number of funds available to UK investors this week, including Martin Currie GF Asia Pacific and Investec UK Smaller Companies. Click here to see the full list.
