Fund Times: 6 - 9 April
HSBC launches absolute return global emerging markets fund; Threadneedle expands specialist range; OMAM plans to merge ethical fund; UK funds assets under management rise 3% in February; Morningstar qualitative ratings and reports issued this week
HSBC will launch a UCITS III absolute return global emerging markets fund this month, HSBC GIF GEM Equity Alpha. The fund will be co-managed by Omar Negyal and Nick Timberlake. Negyal joined the firm in 2009 from hedge fund specialist Lansdowne Partners where he managed long/short global emerging markets funds for nearly three years. Prior to this, he worked within F&C’s Asian emerging markets team for seven years. Timberlake, who has two decades’ investment experience, has been at HSBC since 2005 and also came from F&C. The managers will run a high conviction long/short portfolio of global emerging markets stocks, investing in some 35 long and 35 short stock positions. The fund has an AMC of 1.5% and there is a 20% performance fee of any outperformance of one month LIBOR for the GBP share class. We think the performance fee structure is poor as the fund is charging a full active management fee, and the hurdle rate strikes us as far too low.
Threadneedle Expands Specialist Range
Threadneedle has launched two specialist SICAV funds, the Threadneedle (Lux) Global Technology fund and the Threadneedle (Lux) US Communications & Information fund, sub-advised by the firm’s US sister company, Seligman. Both have been on offer to US investors for over twenty years. The technology fund is run by Richard Parower and invests in global technology stocks and technology-related industries. Parower has run its US sibling Seligman Global Technology since January 2002 and achieved excellent results. Over the last five years, the fund has returned 14.6% annualised, landing in the top-decile of its Morningstar Technology category. Paul Wick manages the communications and information fund, which holds US companies with operations relating to communications, information and other related industries. Wick has been at the helm of this fund since January 1990 and has also amassed an impressive record. Investors should note that given their relatively narrow focus sector funds such as these will typically be more volatile than broader US or global equity funds.
OMAM Plans to Merge Ethical Fund
Old Mutual Asset Management has announced it will merge Old Mutual Ethical fund next month, subject to shareholder approval. The fund, which is rated Inferior by Morningstar, has suffered a sharp drop in assets and at its current £10m base OMAM claims it is uneconomical to continue running. The fund will merge into Premier Fund Managers’ £50m Fellowship fund, which is run by Chris Wright. The Fellowship fund takes a less stringent stance to ethical investing, targeting companies which are making a positive contribution to society. This differs markedly from Old Mutual’s approach of applying a negative screen to exclude companies with any significant involvement in areas such as armaments, tobacco, pornography, and others. Investors should therefore note that the Fellowship fund may not be aligned with their ethical beliefs.
UK Funds Assets Under Management Rise 3% in February
UK domiciled funds' assets under management witnessed a modest 3% rise between January and February 2010 to total £484.7 billion according to the latest figures from the IMA, the trade association that promotes the business interests of UK asset managers. The same pattern held true for overseas funds which increased by a smaller 2% and are now at £24.9 billion. These figures, however, represent sharp rises of 42% and 67% from February 2009 levels for UK and overseas funds, respectively. Equities have proven more popular than bonds, unlike a year ago, as net retail sales of UK domiciled equity funds jumped 22% in February while the retail sales of fixed-income offerings dropped 4%. Within equities, the global, Asian and North American sectors were the most popular, while the IMA UK All Companies, UK Smaller Companies and Europe ex-UK sectors have witnessed net outflows.
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 AXA Framlington Equity Income and Schroder Income Maximiser. Click here to see the full list.
