The latest in funds and investment news from across Europe and the UK.
Somerset Capital Management
Mayfair-based investment firm Somerset Capital Management is to launch the MI Somerset Emerging Markets Discovery Fund that will follow the same investment philosophy as the EM Small Cap Strategy launched by the firm more than a decade ago.
The asset manager, co-founded by Conservative MP Jacob Rees Mogg, specialises in global emerging markets investments. Rees Mogg, who resigned from his role at the company in July after being named leader of the House of Commons, has faced a grilling from the media over potential investment conflicts as the Brexit outcome continues to roil UK markets and sterling's fortunes.
The firm said the new MI Somerset EM Discovery Fund, to be officially launched on 30 October (a day before the Brexit deadline), will target small and mid-cap companies operating in emerging markets. The UCITS fund will be UK domiciled and managed by the team behind the Somerset Emerging Markets Small Cap Strategy. Run by Mark Asquith since 2008, it has achieved annualised net excess returns of 3.01 per cent. It will have a six-month free period on fund fees.
Asquith said: “We believe there is potentially a triple opportunity here: one, emerging markets are cheap and under-owned; two, within emerging markets, small and mid-caps have suffered their most prolonged period of underperformance versus large caps since the 1990s; and three, this fund is skewed towards cheaper areas of the market such as EMEA and Latin America, rather than Asia which dominates the benchmark.”
The MI Somerset EM Discovery Fund will sit in the IA Global Emerging Markets sector and focus on companies with a market cap between $1 billion and $7.5 billion. The firm added that under Asquith, the team will have the flexibility to hold onto businesses as they mature into larger ones and can hold up to 20 per cent in frontier markets.
The fund will be run with the same process and philosophy as the $488 million Somerset EM Small Cap Strategy, which has outperformed its benchmark in 8 of the last 11 calendar years since its launch in 2008, the group said.
Fair Oaks Capital, Alpha UCITS
Fair Oaks Capital and Alpha UCITS have launched the Fair Oaks High Grade Credit Fund, the first UCITS sub-fund focused on senior notes of collateralised loan obligations.
A CLO is a single security backed by a pool of debt, such as corporate loans.
The launch of the initial share class was completed on 30 September, with assets of €146 million ($160 million), the firms said. Initial investors include pension funds, asset management companies and private banks from jurisdictions including the UK, Scandinavia, Spain, Italy, Switzerland and Singapore.
The fund is actively managed by Fair Oaks, an asset manager with offices in London and New York. It will primarily seek long-only exposure to AAA and AA rated CLO securities with no leverage used at the fund level. The fund will target annual net returns of Euribor+1.50 per cent, offering daily liquidity and net asset value pricing.
The sub-fund is the second Alpha UCITS offering with Fair Oaks acting as investment manager. The €514 million Fair Oaks Dynamic Credit Fund (invested primarily in BBB rated CLO securities) launched in September 2016, was the first UCITS sub-fund to offer global exposure to senior secured corporate loans through investments in rated CLO securities. Several investors in the Fair Oaks Dynamic Credit Fund have also invested in the Fair Oaks High Grade Credit Fund.
Based in London, Alpha UCITS is a structuring and distribution platform for UCITS funds launched with blue chip investment managers. Alpha UCITS was founded in 2009 by Stephane Diederich, formerly a partner at Brevan Howard Asset Management LLP.
Aberdeen Standard Investments
Aberdeen Standard Investments has launched its first fixed maturity product, aimed at emerging market investments.
The UK firm has raised $167 million for the Emerging Markets Bond Fixed Maturity 2023 Fund. It is domiciled in Luxembourg; it is designed to protect income and capital over its term (to October 2023) by investing at least two-thirds of the fund’s assets in emerging market government and corporate bonds.
A FMP is a portfolio of selected bonds that have matching maturities to the term of the fund.