October 2014

FUND LAUNCHES: Ashmore uses its RQFII status

We profile the most interesting fund launches in the past month and examine the performance of one fund a year after it hit the market.

Ashmore Group wAS the first asset manager outside Greater China to be awarded renminbi qualified foreign institutional investors (RQFII) status by the China Securities Regulatory Commission, in January of this year. It has followed this achievement with the launch of three China-focused funds – a debt, an equity and a multi-strategy product.

FL1“China is not only the world’s second-largest economy, it is also one of the most difficult to access, with local markets having been largely inaccessible to foreign investors,” says Christoph Hofmann, head of distribution at the firm, who reveals that the new funds will allow investors to correct their underexposure to this huge market.

Investors will hope to benefit as China undergoes a thorough transformation from an export to domestic-led economy, a change which Jan Dehn, head of research, thinks will be especially positive for the country’s debt markets.

Korea-based asset manager Mirae Asset Global Investments hopes to increase its European assets with its latest product, a Luxembourg-domiciled Asian equity fund managed in Hong Kong. The fund will invest in high growth companies in Asia, excluding Japan, with a preference for small and mid-cap firms in the consumer, healthcare and e-commerce sectors.

Sung Ho Im, a senior portfolio manager, will manage the fund, which is not tied to a benchmark. The specialist emerging market asset manager has $65 billion (€50 billion) under management.

The firm’s chief marketing officer Ashley Dale says the launch should build on its already successful asset raising, which has seen assets under management in its European Sicav range double in the past year. “The Asia Growth Equity Fund will capitalise on this position,” says Dale.

Specialist fund manager VAM, which looks after $650 million, is hoping to capitalise on a rising desire for frontier market investment with a new equity fund investing in companies based in or doing business with the 33 countries classified by MSCI as frontier markets.

US-based investment adviser Driehaus Capital Management, a partner company, will be the investment manager of the Luxembourg-domiciled fund, while Chad Cleaver will manage the portfolio. Cleaver says he is attracted to frontier markets because of their demographics and strong growth potential.

“Many consumer-related industries are at early stages of development and increasing local demand – such as in banking services, retail merchandising, mobile penetration and auto sales – which is a significant driver of growth,” he says.

The US has registered impressive equity growth in the years since the financial crisis and some fund managers think US equities are expensive. But Cormac Weldon, manager of the Artemis US Equity fund, says there are still good-value picks.

“Yes, some parts of the American market are looking fully valued,” he says. 

“But whether it’s from the revolution in shale oil and gas or from innovation in the tech sector, I am seeing just as many attractive investment opportunities in North America as I have throughout my 25-year career.”

Weldon is also the manager of the US Select Fund from Artemis. His two funds and the US Extended Alpha Fund, managed by Stephen Moore, are launching as open-ended investment companies in the UK.

Last year, Schroders launched a second Indian equity fund in addition to its Schroder ISF Indian Equity product, launched in 2006. 

The fund is advised by the India-based Axis Asset Management, and takes an all-cap approach that is not constrained by a benchmark.

The fund launch came at a difficult time for India, which had been affected by the anticipation of US Federal Reserve tapering. The Indian rupee had fallen to its lowest level against the dollar in years, causing headaches for Indians who depended on imported goods. Chandresh Nigam, chief executive of Axis, admitted India had “certain short and medium term challenges”.

A year on, India has its mojo back under new prime minister Narendra Modi. The fund has reached $93 million under management as of August 31.

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