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Bringing you news, views and analysis since 2013
James Williams, Hedgeweek

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Event-driven alternative UCITS’ AuM up 131 per cent in 2014… Vanguard launches four new ETFs on LSE…

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Vanguard this week launched four Irish-domiciled Exchange Traded Funds (ETFs) on the London Stock Exchange. The new funds complement Vanguard’s existing ETF range and will give UK investors the opportunity to construct low-cost equity portfolios with greater international diversification.

Vanguard Asset Management now offers thirteen ETFs in the UK. Since launching its range in May 2012, Vanguard now has more than USD10bn in European ETF assets under management.  

The new ETFs will seek to track the performance of broadly diversified FTSE indices. The ongoing costs for Vanguard’s European ETF suite range from 0.07 per cent to 0.29 per cent compared to an industry average of 0.35 per cent (based on ETFGI data).

The four ETFs are as follows:

  • Vanguard FTSE 250 UCITS ETF: holds all, or nearly all, of the 250 mid-cap UK stocks that make up the FTSE 250 Index.
  • Vanguard FTSE North America UCITS ETF: uses an index-sampling strategy to invest in large- and mid-cap stocks of the United States and Canada.
  • Vanguard FTSE Developed Europe ex UK UCITS ETF: holds large- and mid-cap stocks from 15 developed continental European markets.
  • Vanguard FTSE Developed World UCITS ETF: uses an index-sampling strategy to invest in stocks of large and mid-size companies in 25 developed markets.

 
Ken Volpert, head of investments for Vanguard in Europe, said: “Today’s launch represents Vanguard’s commitment to offering UK investors a complete, broadly diversified ETF and mutual fund line-up in order to construct globally diversified portfolios at an extremely low-cost. ETFs are coming of age in Europe as both retail and institutional investors value their low costs, liquidity and transparency.”
 
Amundi is looking to double the size of its ETF and indexing business over the next three years. With USD1.1tn of assets under management Amundi is Europe’s leading asset manager. The group is targeting its ETF & Indexing expertise as one of the core axes of its development strategy, with the aim of reaching USD100bn of AuM in the next three years.
 
Passive management is one of the fastest growing segments within the asset management industry, now representing 15 per cent of assets managed worldwide. In a continuously evolving environment, investors are, in particular, seeking tailored indexed solutions.
 
Yves Perrier, CEO of Amundi commented: “Amundi is closely involved with this trend. Building on its index management expertise is very much in line with Amundi’s strategy, which is to develop specific investment offerings and provide its investors with a broad range of solutions through its investment management platforms. Amundi’s advantageous cost structure is of great benefit to its index management business, while international investors recognise our ability to tailor solutions to their individual needs and constraints.”
 
An “ETF and Indexing” business line was created at the end of 2013 in order to align Amundi’s strengths and better provide for investors’ passive management requirements worldwide, whether through open-ended funds or dedicated mandates. The business line has specialist managers and dedicated sales forces, supported by the group’s considerable resources. Drawing on the group’s skills in research, analysis, order execution, and risk and credit management, they are well positioned to best serve clients’ interests.
 
Valérie Baudson, Global Head of ETF & Indexing at Amundi, added: “Our ambition is to double our assets under management in the next three years. Our ETF and Indexing business has demonstrated dynamic growth, having attracted net flows of some $6bn since the beginning of the year. We are now in the process of speeding up this progress by leveraging on our two key strengths: our outstanding pricing power and our ability to innovate and build tailored solutions, such as those recently developed in Smart Beta and in SRI/low carbon management.”
 
Alternative UCITS posted declines of -0.13 per cent on average in September bring their performance on a year-to-date basis to 0.99 per cent. According to figures released by Alix Capital, which runs the UCITS Alternative Index family of indices, the main culprits last month were Emerging Markets funds, down -1.45 per cent, followed by Event-Driven fund (-0.90 per cent) and Long/Short Equity funds (-0.35 per cent).
 
On the flip side, FX and CTA funds were able to generate returns of +1.29 per cent and +0.52 per cent. CTA funds are far and away the best performing strategy in 2014, with YTD gains of +4.52 per cent on average. The next best performing strategies are Multi-Strategy (+2.00 per cent) and Fixed Income (+1.45 per cent).
 
Assets managed in UCITS absolute return funds progress by more than EUR5bn in September to reach EUR248bn. The largest increase in absolute terms was achieved by Multi-Strategy funds with EUR1.6bn while CTA and Equity Market Neutral displayed the largest relative progressions, both up 6 per cent. Assets through September across all strategies have grown by more than 30 per cent in 2014 according to Alix Capital. With an increase of 131 per cent, Event-Driven funds have enjoyed the biggest AuM growth since the start of the year. They are followed by Long/Short Equity and Equity Market Neutral funds, up 55 per cent and 54 per cent respectively during the same period.
 
Pictet Select-Global Long/Short Equity has attracted close to EUR200mn in commitments since its launch on 29 August 2014 reported Hedgeweek this week.
 
The fund, which is managed by Geneva based Pictet Alternative Advisors (PAA), will be initially offered via a selection of ABN AMRO’s international private banking distribution channels.  

 
Pictet Select-Global Long/Short Equity invests in 10 to 15 UCITS-compliant hedge funds within long/short equity and event-driven strategies. The portfolio has a weekly liquidity and is purposely diversified across sectors, regions and management styles to achieve efficient exposure to equity markets. The portfolio allows investors to participate in equity market upside while limiting the downside through active exposure management and long/short stock selection.
 

 
Nicolas Campiche, CEO of Pictet Alternative Advisors, commented: “Pictet has been managing long/short equity portfolios since the early nineties, and we are confident that long/short equity can generate equity-like returns with limited risk. PAA will continue to use its extensive knowledge in selecting hedge funds and managing dedicated portfolios in order to best serve ABN AMRO’s clients.”
 
 
Marc de Kloe, head of funds and alternatives, ABN AMRO Private Banking, said: “Given the recent evolution of the alternative UCITS space, we believe that this is a unique and forward-thinking approach. Clients think of equity or fixed income exposure. This solution will allow our investors to build robust equity portfolios by accessing a range of specialist equity managers.”

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