September 2017

FUND LAUNCHES: Information advantage

BinocularsRecent product launches include emerging market small-caps and ‘CoCos’.

Contingent convertibles
Old Mutual Global Investors has launched its first ‘CoCos’ strategy, a type of fixed income investment.

The Old Mutual Financials Contingent Capital Fund, made up mainly of contingent convertible bonds (‘CoCos’), aims to generate income and capital growth from a mix of fixed and variable rate debt securities issued by institutions with minimum capital requirements, such as insurers and banks. At least 75% will generally be invested in contingent convertible bonds, a form of debt that can convert into equity or be written down when the regulatory capital of the issuer drops below a certain level.

Post-financial crisis, CoCos were designed to increase banks’ ability to bear losses beyond their equity buffers. They typically offer a higher rate of interest than traditional bonds, lower volatility than European bank equities and can act as a good income diversifier in portfolios.

Emerging market small-caps
BMO Global Asset Management has launched an emerging markets smaller companies fund. The BMO LGM Global Emerging Markets Smaller Companies Fund will be managed by LGM Investments, BMO’s emerging markets manager.

Irina Hunter, lead portfolio manager with Claire Franklin, said: “Emerging markets’ smaller companies are one of the few places left where one can achieve a genuine information advantage. Simply speaking, the sector lacks research coverage and, as such, price discovery.”

The Ireland-domiciled fund is available to institutional and advised retail investors in Luxembourg, the Netherlands, Norway, Spain and Sweden.

Income and multi-asset
HSBC Global Asset Management has launched four global funds covering income and multi-asset. The HSBC Global Equity Income and HSBC Global High Income Bond are joined by an ‘adventurous’ and a ‘cautious’ pair of multi-asset funds that also invest globally. The multi-asset funds are the HSBC Global Strategy Conservative and HSBC Global Strategy Adventurous Portfolios, They belong to a fund range with a 0.16% ongoing charge.

MSCI Europe (ex-UK)
ETF provider Source has launched a British version of its MSCI Europe ex-UK ETF listed on the London Stock Exchange, called the Source MSCI Europe ex-UK Ucits ETF. It provides diversified exposure to large and medium-sized companies across 14 developed market economies and has an ongoing charge of 0.20% a year.

Active FX ETF
UK-based investment management company First Trust Global Portfolios (FTGP) has launched the first actively managed foreign exchange ETF in Europe. The new First Trust FactorFX Ucits ETF will hold a basket of 20 -30 currency pairs in developing and emerging markets through forward foreign contracts, futures, money market instruments and short-dated sovereign debt.

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