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

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UCITS Equity funds suffer net outflows for first time since June 2013… Neuberger Berman launches Long Short Multi-Manager UCITS fund…

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WisdomTree this week launched a further two UCITS ETFs listed on the London Stock Exchange. This brings the total to six ETFs listed on the LSE in the past four weeks and further solidifies its position as a pioneer of dividend-weighted ETFs.

The two latest ETFs are:

  • WisdomTree Emerging Markets Equity Income UCITS ETF (DEM)
  • WisdomTree Emerging Markets SmallCap Dividend UCITS ETF (DGSE)

As with the first four WisdomTree ETFs listed on 24 October 2014, the ETFs are Irish-domiciled and physically replicated, with underlying shares held with State Street, a global leading custodian and administrator. One of the world’s leading ETF market makers, KCG Europe, will act as market maker for the products.
 
The two new emerging markets funds track proprietary WisdomTree indices which have been live since 2007. The indices are designed to be an alternative to market capitalisation-weighted indices, which weight stocks on price alone.  We believe the major flaw with market capitalisation-weighted indices is that as stocks increase in price, their weight in the index increases and vice versa, as stocks decrease in price, their weight in the index decreases. 
 
Nik Bienkowski, Co-CEO of WisdomTree Europe commented: “We are extremely proud to expand WisdomTree’s platform of UCITS ETFs with two new ETFs providing exposure to emerging market small caps and emerging market equity income.  WisdomTree’s dividend-weighted Smart Beta ETFs now cover the three major regions of Europe, the US and Emerging Markets. Over the long-term, dividend-weighted indices have the potential to improve risk-adjusted returns.”
 
The WisdomTree Emerging Markets Equity Income UCITS ETF tracks the WisdomTree Emerging Markets Equity Income Index, a fundamentally weighted index that measures the performance of the highest dividend yielding stocks selected from the WisdomTree Emerging Markets Dividend Index. At the index measurement date, companies within the WisdomTree Emerging Markets Dividend Index are ranked by dividend yield. Securities ranking in the highest 30 per cent by dividend yield are selected for inclusion. Companies are weighted in the Index based on annual cash dividends paid.
 
The WisdomTree Emerging Markets SmallCap Dividend UCITS ETF tracks the WisdomTree Emerging Markets SmallCap Dividend Index. Companies included in the Index fall within the bottom 10 per cent of total market capitalisation of the WisdomTree Emerging Markets Dividend Index as of the annual index measurement date.
 
Neuberger Berman this week launched the Neuberger Berman Long Short Multi-Manager Fund, a sub-fund of its Irish-domiciled UCITS umbrella, Neuberger Berman Investment Funds plc, reported FTSE Global Markets.
 
The fund seeks to generate long-term capital appreciation by allocating to a number of external hedge fund managers, principally those running global equity long/short strategies. Manager selection is based on utilizing Neuberger Berman’s Alternatives team of more than 50 professionals. The fund is managed by members of the Neuberger Berman Hedge Fund Solutions group established in 2002, including managing directors David Kupperman, Fred Ingham, Jeff Majit and Eric Weinstein, and senior vice president, Ian Haas. 
 
Dik van Lomwel, head of EMEA and Latin America at Neuberger Berman said that the fund was launched in response to client demand for focused single strategy portfolios alongside the firm’s existing multi strategy UCITS fund. “This new fund will invest in equity focused long short strategies diversified across managers, geographies and sectors, allowing investors to gain exposure to active long and short stock selection whilst reducing exposure to general market risk,” van Lomwel was quoted as saying.
 
“The current backdrop of high dispersion in equities has created a fertile stock picking environment and we believe this is a timely point in the market to launch the Neuberger Berman Long Short Multi-Manager Fund,” added Fred Ingham, head of International Hedge Fund Investments at Neuberger Berman Alternative Management
 
Net flows into UCITS equity funds turned negative for the first time since June 2013 according to the latest Investment Funds Industry Fact Sheet produced by the European Fund and Asset Management Association (EFAMA). Figures showed that net sales dropped to EUR14bn in September, down from EUR41bn in August. EFAMA noted that the primary reason for the reduction was the result of a turnaround in net flows to money market funds during the month.
 
Other key figures included:

  • Long-term UCITS posted net inflows of EUR28bn, compared to EUR32bn in August.
  • Bond funds registered decreased net sales of EUR13bn, down from EUR16bn in August.
  • Net flows into equity funds turned negative for the first time since June 2013, posting net outflows of EUR6bn compared to net inflows of EUR2bn in August.
  • Net flows of money market funds returned to negative territory in September posting net outflows of EUR14bn, compared to net inflows of EUR9bn recorded in August.

  
Total net assets of UCITS stood at EUR7.86tn at the end of September 2014, representing a 0.8 per cent increase during the month.
 
Bernard Delbecque, Director of Economics and Research, commented: “Despite net outflows from equity funds, net sales of long-term UCITS remained robust in September thanks to sustained demand for bond funds and rising demand for balanced funds.”

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