KUALA LUMPUR – Affin Hwang Asset Management Berhad (“Affin Hwang AM” or the “Company”) launched Affin Hwang European Unconstrained Fund (“EUF” or the “Fund”) today. The Fund is a wholesale equity feeder fund which seeks to achieve capital appreciation over medium to long-term period by investing in collective investment scheme, namely UBS (Lux) Equity SICAV – European Opportunity Unconstrained (“the Target Fund”), a Luxembourg-domiciled fund of UBS Asset Management. The Fund will invest a minimum of 80% of the Fund’s NAV into the Target Fund and maximum 20% of the Fund’s NAV into money market instruments, fixed deposits and/or liquid assets. The Target Fund predominantly invests in equities, equity rights or other capital shares of companies domiciled or chiefly active in Europe.
The Target Fund is managed by the UBS Concentrated Alpha Team of UBS Asset Management (UK) Ltd, London; a specialised team dedicated to portfolio management of European equity strategies. UBS Asset Management is Switzerland’s largest asset manager with vast investment expertise in European markets, supported by 800+ individuals globally across UBS Global Asset Management.
Chan Ai Mei, Chief Marketing Officer of Affin Hwang AM said, “We identified an opportunity to gain returns through the Target Fund. It is a flexible equity fund that invests in European stocks and its strategy allows the Target Fund Manager to take up short positions alongside the Fund’s long positions, and this gives the Target Fund an extra source of returns whilst also providing downside protection.” Since the inception of the Target Fund’s strategy in May 2007, the Target Fund achieved 5 years cumulative returns of 106.8%1, outperformed its benchmark, MSCI Europe, by 56.0% (Source: UBS Asset Management as of 30 September 2015). YTD the Target Fund outperformed the benchmark by 9.8% 2 , the Target Fund achieved 13.0% while the benchmark achieved 3.2% (Source: UBS Asset Management as of 30 September 2015). The outperformance is achieved based on an unconstrained best idea approach, where the Target Fund Manager has the flexibility to short sell stocks that they believe will not do well.
The Target Fund Manager chooses stocks based on conviction and is not constrained by benchmark holding, giving the Target Fund a better chance for outperformance. All stock ideas, including the Target Fund’s short positions are an outcome of the Target Fund Manager’s fundamental research process. The flexibility to short means that the value of the Target Fund could be cushioned during market downturns and can better protect capital and give investors a less volatile ride to European equities. ‘Short selling’ essentially means selling a security one does not own in the hope of purchasing it later at a lower price to cover the sale and thereby making a profit. Ai Mei explained the three (3) “short” investing myths:
Shorts are risky relative to long positions
|The Target Fund Manager has a daily stop loss check. Their short positions, together with their long positions, reduce overall volatility.|
Shorts are more expensive
|The Target Fund Manager has many counterparties and can obtain the best execution for the Target Fund.|
Shorts have liquidity cost
|The Target Fund Manager monitors the short interest and supply to borrow and have never been short squeezed.|
There are five main reasons on positioning investments into the European market. Firstly, earnings growth will be the main driver to boost the European market as company earnings in Europe are expected to grow strongly. Secondly, a relatively lower Euro will enhance the competitiveness of European goods and services. This will also give a positive impact on exports as half of European company earnings are derived from outside Europe. Thirdly, Quantitative Easing (“QE”) for Europe will keep demand for risk assets high as investors will look for more attractive asset classes as interest rates remain low in Europe. QE in US,
Japan and UK has been positive for stock markets, as such, impact on QE in Europe will likely be significant. Fourthly, Eurozone is one of the biggest net oil importers and will benefit from the lower oil prices. A lower energy price will boost corporate profitability and consumer spending. Lastly, valuations for European companies are not expensive and dividend yields are relatively attractive, which should provide for ample opportunities for investors in the European market.
EUF is a growth fund that seeks to achieve capital appreciation over medium to long-term period through investments in European equities. The Fund is suitable for investors who have a long-term investment horizon, seek capital appreciation through investments in European equities and have high risk tolerance. The Fund is available in four (4) currency classes; Euro Class, MYR-Hedged Class, SGD-Hedged Class and AUD-Hedged Class. The offer period of EUF is not more than 21 days, starting 9 November 2015 until 29 November
- EUF is available exclusively for Citibank’s clients for the first three (3) months of the launch of the Fund. Thereafter, the Fund will be available for investment through Affin Hwang AM and its partners.
Investors are advised to read and understand the contents of the Fund’s Product Highlights Sheet and Information Memorandum dated 9 November 2015 before investing. Visit www.affinhwangam.com for more information of the Fund.
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Chong Chyi Ming | firstname.lastname@example.org | +603 2116 6000