May 2017

FUND LAUNCHES: Fund launches review May 2017

ShanghaiWe profile some of the most interesting fund launches of recent weeks, which include an income fund investing in frontier markets.

ASIAN BONDS
Asian emerging markets specialist Mirae Asset has announced a bond fund launch, saying the increasing number of companies looking for finance would make the regional market deeper.

Mirae Asset Global Investments (Hong Kong) launched the Mirae Asset Asia Bond Fund under the Ucits banner.

The firm said bond valuations in Asia were compelling compared to developed markets and that better credit quality gave investors more diversification opportunities.

Benchmarked against the JP Morgan Asia Credit Index, the fund mainly invests in short-to-medium-duration investment grade credit, but will also buy government, supranational and high-yield names.

Jin Ha Kim, head of global fixed income at Mirae Asset Global Investments, will manage the fund, supported by professionals in five countries including Korea, Hong Kong and India.

Jin Ha Kim said: “We see significant opportunities for growth in Asian bonds due to a favorable macroeconomic outlook, as well as attractive yields, improving financial discipline of credit issuers and lower volatility compared to bonds of other emerging markets.”

Demand for hard currency-denominated bonds remains high because of their lower levels of volatility compared to local currency bonds, the fund manager said.

The new bond fund is a sub-fund of the Mirae Asset Global Discovery Fund, a Luxembourg-domiciled Ucits product.

Fixed income funds make up U$28.8 billion (€26.4 billion) of Mirae Asset Global Investment’s total $100.5 billion of assets under management.

FRONTIER INCOME
With the launch of an income investment trust, Jupiter Asset Management is to target small-cap and frontier markets for their “compelling combination” of dividends and growth.

The Jupiter Emerging & Frontier Income Trust will aim to achieve income and capital growth from companies exposed directly or indirectly to emerging markets and frontier markets.

Ross Teverson, manager of the trust, said: “This new [product] will enable us to take on greater exposure to small-cap and frontier companies, many of which we believe offer a compelling combination of significant dividends today, with what we believe to be substantial growth potential in the future.”

Teverson is currently lead manager on Jupiter’s global emerging markets and China portfolios. He will be assisted by Charles Sunnucks.

The trust has the same process as the wider global emerging markets strategies and will not be constrained by a benchmark. Small and mid-cap stocks make up a high proportion of the trust’s assets, though large-caps also form part of the firm’s investments.

A maximum of 25% of the trust’s stocks, which total 40-45, can be placed in frontier markets, which Jupiter said could offer further risk diversification and the potential for enhanced returns.

JAPANESE EQUITY
EI Sturdza Investment Funds has launched a Japanese equity product in partnership with Tokyo-based Rheos Capital Works.

The EI Sturdza Strategic Japan Opportunities Fund is managed by “industry heavyweight” Mitsuhiro Yuasa, a co-founder of Rheos, which acts as investment adviser to the fund.

Yuasa will invest in high-performing Japanese growth companies, regardless of size, and aims to outperform the Topix TR Index (JPY) over the long term.

El Sturdza, which is based in London, says that in the current macroeconomic environment of comparatively high US interest rates and a strong US dollar, the Japanese equity market is well positioned for improved earnings expectations and extremely low long-term domestic bond yields.

The portfolio team uses a ‘bottom-up’ approach, combined with a macroeconomic overlay.

The Ucits-regulated fund is domiciled in Dublin.

Rheos manages about $2 billion (€1.8 billion) of assets.

EM MULTI-MANAGER
Nikko Asset Management has launched a multi-manager emerging markets fund in a Ucits format.

The fund aims for Libor plus 5%-6% over a three-to-five-year timescale.

Nikko AM said the launch was in response to investor demand.

The firm is operating the fund in partnership with Eurasia Group, which specialises in geopolitical risk research.

The Emerging Markets Multi Asset Ucits fund is managed by Rob Samson.

The multi-asset team is located in Asia, a region that spans more than 60% of global emerging markets, the firm said.

MUNICIPAL BONDS
BNY Mellon Investment Management has launched a US municipal bond fund for intermediary and institutional investors in Europe.

BNY Mellon claims that its Municipal Infrastructure Debt Fund will be one of the first funds of its kind available in a Ucits structure.

The fund will be sub-advised by Standish Mellon Asset Management Company, a BNY Mellon institutional fixed income manager, whose US municipal bond experts have worked together for nearly two decades.

Standish is the fifth-largest manager of US municipal debt strategies in the world with more than $27 billion (€25 billion) of municipal assets under management.

Matt Oomen, head of international distribution at BNY Mellon IM, said: “US municipal infrastructure bonds have historically offered attractive yields, even at times of heightened volatility, while holding higher credit ratings and exhibiting lower default rates than US investment grade corporate bonds.”

The BNY Mellon US Municipal Infrastructure Debt Fund is registered for distribution in the UK, Germany, France, Italy, Spain, the Netherlands, Austria, Belgium, Denmark, Finland, Norway and Sweden. It will also be registered in Switzerland.

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