Launch Pad: 7 funds under the microscope
by Harry Brooks on Feb 12, 2013 at 09:35
Citywire Global tracks down the major fund launches announced in January 2011 to see how they have fared two years on.
Seven funds, two years on
Fund launches are a familiar sight here on Citywire Global. A select few will go on to become legendary names, while many more will quietly fade away.
Here we showcase seven funds which came to our attention in January 2011, and examine how they've performed in the two years since they were launched.
Note: Comparative indices are chosen according to Citywire's methodology, and may not match the funds' chosen benchmarks.
Sector: Long/Short Equity
First up is Morgan Stanley's Algebris Global Financial fund, an Alt Ucits fund launched in collaboration with Algebris Investments.
Overseen by Davide Serra, the fund focuses on the global financial services sector.
Commenting at the launch of the fund, Serra said: 'We believe the sector offers many opportunities for a long-short equity manager and in particular the Ucits fund we are launching in partnership with Morgan Stanley is based on the research process we have been successfully developing for the past four years.'
The fund suffered in its first year, dropping significantly more than the average fund in the sector according to Citywire data. It now stands 25% below where it started, although performance over the past year has been much stronger, with the fund clawing back a 14% return between December 2011 and the end of 2012.
Sector: Bond Global
An emerging market focused high yield income bond fund from Schroders is the second of our Launch Pad funds.
Led by global bond fund managers Wesley Sparks and Luke Chua, the fund aims for high income from exposure to a blend of emerging market sovereigns, corporates and developed market high yield bonds. Until January this year Warren Hyland was also one of the fund's managers until he left the firm to join US group Muzinich & Co.
'Our goal is to offer investors a high income outcome together with diversification benefits while minimizing any permanent loss of capital. This is an important factor as all markets could be subject to periods of volatility as a result of the European sovereign credit problems and policy actions in China that could impact global growth,' Hyland said at the fund's launch.
Having got off to a shaky start, down as much as 5% towards the end of 2011, the fund has since hit its stride, and by the end of January it was up 14%, significantly ahead of its benchmark.
Sector: Long/Short Equity
Aiming to deliver an 8% annual return, the BNY Mellon Absolute Return Equity fund was launched at the start of 2011.
The fund represents a more directional version of the Absolute Insight UK Equity Market Neutral fund and was BNY's first launch via its Insight investment boutique, which it acquired in 2010.
The fund's got off to a solid start, albeit missing its 8% annual return target, coming out almost 10% ahead at the end of the period.
The fund takes both long and short positions in more than 30 currencies, and Dennis said it offers a low correlation to other asset classes, while producing cash-plus returns in what he called 'a challenging environment for more typical cash type investments'.
Performance since launch has been marked by more volatility than average for the sector, as the chart above shows. However, investors who bought in at launch would at the end of January have ended up pretty much where they started.
The chart above shows the performance since launch of two funds, both managed by Investec Asset Management’s head of the emerging markets debt, Peter Eerdmans.
The Investec GSF Emerging Markets Local Currency Dynamic Debt fund offers investors exposure to 23 emerging market countries that the manager considers liquid enough for inclusion. It will take both short and long positions and potential returns are sought from currency convergence as well as bonds exposure.
The Investec GSF Emerging Markets Currency fund invests in a basket of 36 emerging market currencies, with returns largely independent of equity and bond market movements.
The dynamic debt fund is the clear winner of the pair based on the first two years, having delivered a 12% return versus the currency fund's 3%. These two figures neatly bracket the average return for the credit strategies sector, which stands at 7% over the period.
Sector: Multi Strategy
Our last Launch Pad fund for this month is Bank of America Merrill Lynch and Connecticut-based fund manager AQR Capital Management's Global Relative Value fund, which was launched in January of 2011.
The firm runs a number of different strategies, ranging from aggressive high volatility market-neutral hedge funds, to low volatility benchmark-driven traditional products. It's managed by David G. Kabiller.
So far the fund has yet to shine, delivering a 2.5% return over the past two years compared with the multi-strategy sector average return of almost 5% over the same period.
More about this:
Look up the funds
- MS Algebris Global Financial UCITS B EUR Acc
- Schroder ISF Global High Income USD Bond A Cap
- BNY Mellon Absolute Return Equity R GBP Acc
- Schroder ISF Currency Absolute Return EUR A Cap
- Investec GSF Emerging Mkts LC Dyn Debt A Acc USD
- Investec GSF Emerging Markets Currency A Acc USD
- MLIS AQR Global Relative Value UCITS USD A Acc