The Multi-Asset Risk Premia Fund was first launched in Europe at the end of 2016. It is now available in Hong Kong and Singapore to professional investors.
The fund is aimed at investors who are looking for diversification and absolute returns, according to Michael Dyer, the firm’s Hong Kong-based client portfolio manager for equities and alternatives.
A long-short market-netural strategy is used to invest across four different asset classes: equities, fixed income, currencies and commodities, said London-based Ajay Jain, global head of multi-asset class portfolio management, who co-managers the fund with New York-based Wai Lee.
Allocation to asset classes is through various “styles”, including value, momentum, carry and liquidity.
Combining the asset classes and the styles will result in 13 different risk factors. The approach is designed to avoid risks that investors already have in their portfolios, according to Dyer.
The fund does not take any asset class views, he added. “So this is not an allocation product in a sense of saying we think that fixed income [or equities] is the place to be because the risk premia is big.”
While acknowledging that the fund may compete against hedge funds, he believes that the NB fund is more cost efficient, as it has no performance fees.
Multi-asset popularity
The launch of the fund comes at a time when investors are pouring in money into alternative multi-asset funds, as reported.
These funds gained the most net inflows from Asian investors in 2016, according to data from Morningstar.
The data, which includes funds available for sale in Hong Kong, Singapore, Philippines, Taiwan and global cross-border funds for sale in the region (such as Ucits), shows that inflows in multi-strategy funds totaled nearly $10bn.
Source: Morningstar
Capital moving into alternative multi-strategy funds was driven by the JPM Global Macro Opportunity Fund, which had $5.7bn in net inflows.
The JPM fund is classified under the mixed asset category of the FE database. Currently, there are 465 registered under that category in Hong Kong and Singapore, 41 of which incepted in 2016, according to FE data.
Wing Chan, Hong Kong-based director of manager research for Asia at Morningstar, told FSA earlier that investors in the region have been cautious with both equity and fixed income classes due to valuations, especially in developed markets, and therefore have been looking for an absolute-return type strategy that promises an absolute return objective.
“Some of these funds are within the multi-strategy category,” he said.
Dyer believes that investors are now sitting in a world where everything is pretty fairly priced across asset classes.
“Nowhere in the world is it cheap enough for us to say ‘this is a screaming buy opportunity’. It is not like the bottom in 2009 when you wanted to jump into high yield or into equities.”
______________________________________________________________________
One-year performance to end-December 2016 of the mixed-asset international and the equity international sectors, according to FE data.
The equity international sector had steep declines during major events such as the Brexit vote in June and the US elections in November, while the mixed-asset sector did drop as well, though not as steep when those events occured, the chart shows.
However, although the mixed-asset sector outperformed the equity sector during most times during the year, they tended to move close together.
