Tue, Dec 12, 2017
A A A
Welcome Guest
Free Trial RSS
Get FREE trial access to our award winning publications
Industry Updates

Stratton St and Universal launch UCITS Renminbi Bond Fund

Monday, September 30, 2013
Opalesque Industry Update - Universal-Investment and London based fund manager Stratton Street are launching the Stratton Street UCITS Renminbi Bond Fund UI (ISIN LU0850782243). This new UCITS fund follows the strategy of the long-term successful Renminbi Bond Fund managed since 2007 by Stratton Street, a pioneer in the renminbi sector. The original strategy was set up before the offshore CNH or “dim sum” bond market, and has not yet invested in those bonds as they are illiquid and expensive. Instead at present the fund invests in high quality investment grade Asian bonds and uses currency hedges to gain renminbi exposure.

The original fund has had positive returns every year since launch, and a total return of 87% in its first five years (US dollar A class to end December 2012). This fund is one of the best performing fixed income funds over this period globally and is highly awarded. The new fund is a UCITS vehicle allowing more investors to buy into this successful strategy. Stratton Street has a different approach to most fixed income fund managers. Andrew Seaman, fund manager for the Stratton Street UCITS Renminbi Bond Fund UI says “index based bond funds buy more from the most indebted. We buy from creditors, who can sustain their debts and pay us back.” This investment process has driven the company to focus largely on investing in the high growth creditor nations of Asia, including China. These countries have enough overseas assets to pay back their foreign debts and they are borrowing to invest in their long term growth. Over the long term these net foreign asset positions are associated with currency appreciation, which is why Stratton Street is positive about the long term appreciation prospects for the renminbi. The fund allows investors to benefit from the expected renminbi appreciation and the anticipated opening of China’s capital market.

Stratton Street’s base assumption is that the currency will double in value over the next decade. The fund is relatively low volatility, as the renminbi is a fairly stable currency. Investors can reduce the currency volatility by investing in the different share classes for the euro, sterling and Swiss franc class, leaving only exposure to the appreciation of the renminbi against the dollar. A dollar class is also available, as well as a CNH (offshore renminbi) class for investors who wish to use the fund to get a 2 of 2 higher yield than renminbi deposits. With the bonds held being investment grade, and in many cases government or quasi government the credit risk is relatively low. The fund is suitable for investors who want to take a long term view on the performance of Asia and the Chinese currency while holding good quality assets that provide a steady income.

Stratton St Capital has been profiled in Asia Pacific Intelligence.

Press release

bc

What do you think?

   Use "anonymous" as my name    |   Alert me via email on new comments   |   
Today's Exclusives Today's Other Voices More Exclusives
Previous Opalesque Exclusives                                  
More Other Voices
Previous Other Voices                                               
Access Alternative Market Briefing

 



  • Top Forwarded
  • Top Tracked
  • Top Searched
  1. Mediobanca acquires majority stakes in Swiss hedge fund[more]

    Komfie Manalo, Opalesque Asia: Listed diversified banking group Mediobanca SpA said it has acquired a majority stake in Geneva-based hedge fund firm RAM Active Investments SA (RAM AI), an active and alternative asset manager offering a range of act

  2. News Briefs - Italy's Carige to sell consumer credit arm to Chenavari, Less than a year after hedge fund coup, East Bay drug maker cuts jobs, looks to move HQ[more]

    Italy's Carige to sell consumer credit arm to Chenavari Italy's Banca Carige aims to sell its consumer credit unit to London-based hedge fund Chenavari by Dec. 6 when a vital 560 million euro ($664 million) cash call ends. Genoa-based Carige must comply by the end of the year with Europe

  3. Launches - Ex-BlueCrest team to open over $200m hedge fund, Greg Coffey, a hedge fund star who retired at 41, is eyeing a comeback, Brevan Howard plans Greek funds as bond rally signals revival[more]

    Ex-BlueCrest team to open over $200m hedge fund From Bloomberg.com: A team of traders who left BlueCrest Capital Management earlier this year raised more than $200 million for their own hedge fund focused on Asian stocks, according to a person familiar with the matter. Ovata Capital Manag

  4. North America - Miami could attract hedge funds if SALT deductions axed[more]

    From Law360.com: For years, inertia has been Nitin Motwani's greatest foe in his attempts to lure hedge fund owners in the northeast to Miami, which he has pitched as a tropical low-tax paradise. But with the Republican tax bill proposing to eliminate deductions for state and local taxes, he's sensi

  5. Northleaf Capital Partners closes debut private credit fund on $670M[more]

    Bailey McCann, Opalesque New York: Northleaf Capital Partners has closed its debut private credit fund - Northleaf Private Credit I - on $670 million. The vehicle will invest in private credit transactions in Europe and North America, with a primary focus on lending to private equity-backed compa