June 2016

FUND LAUNCHES: Fund launches review

We profile some of the most interesting fund launches in recent weeks and examine the performance of a product already on the market. US EQUITIES
US fund giant Capital Group has launched a Ucits version of its flagship US equities strategy, Investment Company of America. The US version of the fund, which holds $75 billion (€66.5 billion) as of April 30 2016, was launched in 1934. Since launch, the fund has returned an average of 12.9% per annum, surpassing the average annualised S&P 500 return of 10.7% over the same period. Active funds which outperform the 500 index are a small minority of the US equities space; according to S&P data, 82% of actively managed equity funds failed to outperform the index over the past decade. Capital Group has maintained a European presence since 1962, and currently has offices and sales branches in Amsterdam, Frankfurt, Geneva, London, Luxembourg, Madrid, Milan
and Zurich. Last year, the firm announced plans to launch some of its most successful investment funds for European investors. Its first Ucits launch was the Capital Group New Perspective fund in July. The fund will follow the same investment approach as its parent fund, have an ongoing charges figure of 0.9% and a minimum investment of €1,000. ALTERNATIVE RETURN
Candriam has launched a new alternative return equity market neutral fund. Market neutral strategies exploit discrepancies in stock prices by taking long and short positions in stocks within the same sector, industry, market capitalisation and country. Candriam developed its first market neutral strategy in 1997. The firm, which is owned by New York Life Investment Management, says the Candriam Alternative Return Equity Market Neutral Fund will take long and short positions on worldwide equity indices and their constituents while keeping a net equity exposure of less than 25%. Fabrice Cuchet, alternative investments CIO at Candriam, said the team can rely on three complementary performance engines, and a mix of quantitative and qualitative analysis, to pick stocks. The fund is registered for sale in Luxembourg, France, Italy and the UK, and aimed only at professional investors. INFRASTRUCTURE
Baltimore-headquartered Legg Mason will launch a global infrastructure fund in July 2016, the Legg Mason IF Rare Global Infrastructure Income Fund. It will be managed by Rare Infrastructure Ltd, an asset manager based in Sydney and focusing on infrastructure. The strategy will be available to European investors via the UK’s onshore fund range. The portfolio will typically consist of between 30 and 60 listed infrastructure stocks, including those in the energy, utilities, transport, and communications sectors, in both developed countries and emerging markets around the world. The fund will be launched with a founder’s share class with an annual management charge of 0.40% (S share class). Following the fund’s launch, investors will
be charged 0.75% annually (X share class). Founded in 2006 and acquired by Legg Mason in 2015, Rare manages $6.3 billion (€5.6 billion) as at end April 2016 in assets for institutional and retail clients. ABSOLUTE RETURN
US asset manager Janus Capital International is to launch a new absolute return income fund. The strategy seeks to generate positive absolute returns over a full market cycle by incorporating high-quality and high-conviction investments in the portfolio. The launch follows Janus’s acquisition of Kapstream Capital, an Australian-based unconstrained fixed-income manager with $7.2bn (€6.4bn) in assets. As part of the deal, Kumar Palghat, co-founder of Kapstream and former head of Pimco’s Asia Pacific portfolio management, has joined Janus. He will manage the new fund, and serve as co-portfolio manager on Janus’s Global Unconstrained Bond fund, managed by Bill Gross, co-founder of Pimco. The fund’s managers will aim to avoid the limitations of a duration-weighted benchmark and narrow investment guidelines, instead taking an unconstrained approach and sourcing investments from across global fixed income markets. The portfolio will be comprised of investment grade sovereign, corporate and securitised bonds. The launch is the latest in a series of new fund launches for Janus Capital International. In April, the firm launched the Global Adaptive Multi-Asset fund, managed by Ashwin Alankar and Enrique Chang. ONE YEAR ON
A year ago, Dutch asset management firm Robeco launched a multi-factor credit fund, said to offer investors the opportunity to invest in equity factors in international credit markets for the first time. The fund’s management team is led by Patrick Houweling, who joined Robeco in 2003, and has managed Robeco’s conservative credits strategy since 2012. The team primarily invest in investment grade bonds, denominated in US dollars, euros and sterling. Bonds rated BB- can be also held, but are capped at 10% of overall holdings. Its portfolio, typically comprised of 150 to 200 securities, is also duration-hedged with respect to its benchmark (the Barclays Global Aggregate Corporates index) and hedges FX risk to the share class base currency. Between inception and April 30 this year, the fund has delivered 4.9%, gross of fees. Its benchmark delivered 4.23% in the same period. Momentum and low risk factors have been the main positive contributors to the fund’s outperformance since launch. The fund is open to investors in France, Germany, Luxembourg, the Netherlands, Switzerland and the UK. There are plans to extend this in due course. ©2016 funds europe

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