Morningstar Awards UK Funds and Fund Houses
On Thursday evening of this week, Morningstar UK unveiled the winners of its 2011 Fund Awards. First State, Threadneedle, Allianz Global Investors, M&G and MFS all won fund house awards, and ten individual funds also won awards in recognition of their achievements in various categories. Read more here.
PIMCO Responds to Desire for Income in Low Rate Environment
PIMCO kicked off the new fund launches this week with its Monday launch of the PIMCO Select UK Income Bond fund, available as part of the PIMCO Select UCITS III range. The fund is managed by Mike Amey, managing director and portfolio manager responsible for sterling portfolios, who said the expected subdued growth in the UK over the next few years means that the Bank of England is likely to keep rates low and in such an environment traditional sources of income are unlikely to enhance income growth. “In such an environment, there is a greater need to identify alternative sources of income through ‘safe’ higher yielding assets,” Amey said.
The fund targets an annual income distribution of 5%, distributed monthly, and seeks to surpass other income-generating investments like government bonds, certificates, cash and equity funds on a risk-adjusted basis.
Aberdeen Shifts Focus of Asia Bond Fund
Aberdeen Asset Management has changed the mandate and benchmark of its Aberdeen Global Asian Bond fund to focus more on currency, changing the name of the fund in the process. The Aberdeen Global Asian Local Currency Short Duration Bond fund is now benchmarked against the iBoxx – Asia ex Japan sovereign 1-3 years index and provides dedicated exposure to local currency short duration Asian bonds.
The fund, which is domiciled in Luxembourg and managed by Aberdeen’s Asian Fixed Income team in Singapore, will invest mostly in sovereign bonds, across as many as ten different countries in Asia ex-Japan, with an expected initial duration of less than 1.65 years. The average credit rating will be A-minus.
Aberdeen believes the short-duration strategy will appeal to investors seeking lower risk exposure to the Asian growth story, with participation mainly through long-term currency upside (although the Aberdeen Global Asian Local Currency Short Duration Bond fund will pay distributions each quarter).
Schroders Joins JPM in Offering Low-Cost Alternative to Passive Investing
Schroders this week announced the imminent launch of a low-cost, actively-managed UK core fund designed to provide investors with an alternative to passive investing. Subject to FSA approval, the Schroders UK Core fund will be open to investors later in March and will have a maximum total expense ratio of 0.4%. The annual management charge is 0.35% with no initial charge, exit charge or performance fees.
The fund aims to outperform its FTSE All-Share benchmark by 1% per annum after fees by investing in UK equities and will be managed by Schroders’ UK prime team, part of Richard Buxton’s UK equity team.
“We believe that actively managed funds with strong fundamental investment processes like Schroder UK Core are a great alternative to passive funds which simply allocate assets according to size and are destined to underperform,” said Robin Stoakley, managing director of UK intermediary at Schroders.
Jasper Berens, head of UK retail sales at J.P. Morgan Asset Management, which recently launched the JPM UK Active Index Plus Fund, applauded the move and said that such developments can only serve as a positive for investors. “It is high time that investors realised that due to J.P. Morgan Asset Management and Schroders there are now direct competitors to passive funds and ETFs at broadly the same costs” Berens commented. Mirroring Stoakley’s own words, Berens added “Passive funds are not designed to outperform an index, and indeed shouldn't, whereas the JPM fund and the Schroders fund could, at similar costs.”
Swiss & Global Looks to Tap Into Healthcare Demand
Swiss & Global Asset Management has launched the Julius Baer Health Opportunities Fund into the UK. The Luxembourg domiciled UCITS III thematic equity fund will invest in producers, distributors and providers of pharmaceuticals, biotechnology, healthcare services, medical technology and companies active in the areas of speciality pharmaceuticals and generic drugs.
The fund comes with an annual management charge of up to 1.6%, will hold a portfolio of 35-45 equities and can have up to 30% exposure to emerging markets. It aims to tap into the growing demand for healthcare as the global population ages.
New Addition to the Absolute Return Offerings, Part I
Ignis Asset Management is launching its Rates team’s first retail fund at the end of March. The Ingis Absolute Return Government Bond fund will target net returns of 2% to 3% per annum in excess of cash by actively trading a portfolio of global government bonds and currencies. Managed by head of rates Russ Oxley and chief economist Stuart Thomson, the fund comes in response to “considerable demand from IFAs seeking a developed market government bond fund,” Ignis said earlier this week. The long/short investment strategy will take positions in developed market sovereign bonds and AAA supranational bonds, with foreign currency exposure capped at 25%.
The fund requires an initial investment of £1,000 and carries an annual management charge of 1% plus a10% fee on performance in excess of a cash hurdle rate, as measured by the Sterling Overnight Index Average.
New Addition to the Absolute Return Offerings, Part II
Thames River is to launch a European equity-based absolute return fund. The European Absolute Return Fund is domiciled in Dublin and will be soft launched with an eye to developing a track record before being officially marketed later in the year. The fund will carry an annual management fee of 1.75% for its retail share class and a 12.5% performance fee above a hurdle rate of three-month Euribor plus 2%. Randeep Grewal will lead manage the fund, supported by senior portfolio manager David Moss. Together they will take long and short positions with a net long bias targeting 10% plus per annum net of fees across an economic and investment cycle.
New Addition to the Absolute Return Offerings, Part III
Threadneedle is to launch the Threadneedle (Lux) European Smaller Companies Absolute Alpha Fund, in responce to client appetite for a European smaller companies absolute alpha product. The UCITS III fund will give manager Philip Dicken and his team flexibility in strategy and fund positioning, and aims to offer investors access to an investment vehicle focused on alpha-generation in a regulated format.
The performance of Dicken’s Threadneedle Pan European Smaller Companies fund has earned it a 5-star quantitative rating from Morningstar. The new absolute return offering launched on Thursday of this week and is a regulated UCITS III SICAV fund. Along side this launch, Threadneedle has updated certain investment vehicles to refine its absolute return range in anticipation of distribution reforms in Europe, as a result of which it has closed its hedge fund Threadneedle European Smaller Companies Crescendo Fund.
Gartmore Irish Growth Investors Can Broaden Focus or Receive Cash
Investment trust Gartmore Irish Growth is to hold an EGM on March 22 to put forward wind-up proposals. Shareholders will be offered the choice of taking cash or units in the Threadneedle Pan European Smaller Companies fund. Run by Philip Dicken since November 2005, this £631 million fund invests across Europe and the UK; at December 31, 2010, it had just 2.8% in Ireland, though, compared with more than 80% in the Gartmore fund (at September 30, 2010). “For shareholders, it presents a very different opportunity set which may no longer suit their portfolios,” commented Jackie Beard, Morningstar UK Director of Closed-end Fund Research, earlier this week.
