Northern Trust says its Ucits platform will appeal to Asian managers
Use of Europe's Ucits structure seems to be gathering pace, despite concerns that it could harm fund returns. US financial services group Northern Trust last week launched a Ucits cross-border vehicle through which asset managers can offer funds to institutions.
And the Chicago-based firm believes its platform -- the Dublin-domiciled Northern Trust Common Contractual Fund (CCF) -- will attract demand from Asia-based fund managers looking to distribute products in Europe or indeed elsewhere.
Within the CCF, asset managers can establish sub-funds with distinct portfolios of assets, investment guidelines, fund features and investors. Northern Trust will provide global custody, fund administration, investor-level tax services and management company services to the CCF and the underlying sub-funds.
"Asia-based managers may leverage our platform to easily establish a Ucits fund, and we expect demand from the region for products that can be distributed in Europe," says Martin Campbell, multinational pooling product manager at Northern Trust. "Northern Trust has the personnel and expertise in our Dublin office to support the fund, allowing these managers to focus on managing assets from Asia."
There's strong demand from Asian investors for Ucits products, adds Campbell, so Asian managers will use this platform to sell such products purely to Asian investors. In addition, managers using separately managed accounts for Asian investors may determine that a Ucits fund is a more efficient structure, says Campbell.
Asia-based asset managers are certainly showing interest in the Ucits structure, with Fullerton Fund Management in Singapore and Hong Kong's Galaxy Asset Management among those to have set up Ucits-compliant funds with a view to boosting distribution in Europe.
US-based investment adviser Axiom International Investors has become the first firm to register a strategy with the CCF -- a sub-fund under a global equity mandate -- and may also sell the fund in Asia. Axiom will launch the sub-fund for several UK-domiciled investors initially.
"We plan to distribute the fund in Europe, Canada and Australia," says Bart Tesoriero, chief operating officer at Axiom in Greenwich, Connecticut. "If our marketing team and their network of consultants find a demand in Asian countries we will distribute the fund in those countries too."
The global equity fund is currently 22% invested in the Asia-Pacific region, he adds, but would not disclose the breakdown of its investor base. Axiom managed around $12 billion as of March 31.
Axiom is not the only US fund manager to have registered a Ucits vehicle; Neuberger Berman last week launched a Ucits version of its Global Thematic Opportunities Fund.
Northern Trust says the CCF is recognised as tax-transparent in many investment markets and investor jurisdictions, thereby allowing institutions to benefit from treaty arrangements between their home jurisdiction and the country of investment.