MF Global launches new CTA fund

MF Global has launched a CTA/Managed Futures Fund. It has incorporated a new vehicle, named MF Global Futures Trust, to handle this strategy and its first product is called the MF Global Multi-Strategy Futures Trust Fund.

This fund will invest across 110 market and products and has been launched in Taiwan, where regulations were changed in 2008 to permit offerings of managed futures funds to domestic investors.

It will be offered to institutional and retail investors through a brokerage joint-venture that MF Global has in place with Polaris Securities in Taiwan, called Polaris MF Global futures. This link gives MF Global access to a sales force of approximately 1,100. They also have relations with banks to access further distribution networks.

It is a public fund, with 30% of the cash going to Aspect Capital, a London-based managed futures/ CTA house. They will use that cash to fund margin calls, while Aspect Capital will run 100% of the notional amount of the fund. The rest of the capital is managed internally and will be used fairly conservatively using fixed income securities to generate a yield and seek to make back fees for investors. It is organised in this way to accommodate Taiwanese rules for this product.

Heading MF Global as CEO in Hong Kong is Peter Lewis, (who turned 50 on the day AsianInvestor met him to discuss this story). "We’re now going back to our roots a bit by building a CTA business," he says. "We think there’s an opportunity in Asia to become a gatherer of assets for these types of fund products.”

The firm is 224 years old and started as a sugar broker called ED&F Man. It developed into a commodities broker and a derivatives broker. ‘Man Financial’ became part of the Man Group, whose fund management business became Man Investments.

Three years ago the firms separated, with MF Global spawning from the IPO of Man Financial. MF Global listed on the NYSE in mid-2007. Man Investments sold off its residual stake in MF Global (approximately 20%) last summer so now there is no cross-shareholding, though Man Investments is still a client of MF Global.

MF Global is expanding in equities in Asia, building up research in Japan and Hong Kong. It already has about 250 people working in equities in India.

The plan is to do a CTA product in mainland China next, where MF Global is working with a couple of counterparties to see how they can do a similar thing.