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Manager Profile: What accounts for the success of the Nomura AHL launch in Japan?

Friday, June 03, 2011

Investors Respond to AHL Nomura Launch

Nomura Global Trend, an open-ended fund for the Japanese mass market, attracted $2 billion in a short time. Launched this April, it was initially reported to have raised $1.5 billion. It offers daily liquidity.

The product was developed by Man Group in partnership with Nomura and its investment program is Man Group's AHL managed futures strategy. The launch took place in the immediate aftermath of the earthquake and amid ongoing problems at the Fukushima Daiichi nuclear plant. The earthquake-nuclear crisis apparently did not deter Japanese investors.

What accounts for the success? Nomura Global Trend has certain special characteristics. It allows for exposure to high-yielding currencies. Investors can choose to have exposure to one of three currency baskets- Yen; Brazilian Real, Australian Dollar and South African Rand; or Chinese Renminbi, Indian Rupee and Indonesian Rupiah. Nomura Asset Management does the foreign exchange hedging. There is also potential for monthly dividends.

Man Group says that this is a new product concept and these features were especially appealing to the Japanese retail sector. No doubt an extensive distribution network and effort helped. The fund was marketed by a combined Man and Nomura team, who conducted more than a hundred seminars and study sessions throughout the Nomura branch network.

Man has extensive distribution relationships in Japan, including relationships with three out of the five largest security brokers and three of five big commercial banks. It is connected to over 40% of the publicly placed hedge fund market in Japan.

Another probable attraction for retail investors is AHL's long-term track record. Annualized returns are ahead of traditional asset classes and hedge funds as a whole (see table).

Nomura Global Trend is a prime example of the growing trend toward using the same system to develop different products and investment services, a theme discussed in several articles in this issue. AHL is the manager for a number of retail offerings, including two UCITS funds, Man AHL Trend and Man AHL Diversity.

These European mutual funds, launched in July 2009, have more than $750 million in assets. They had weekly liquidity but this May Man Group announced that it will offer a daily dealing facility.

AHL also expanded its operation in Hong Kong and will broaden its trading capabilities to include a renminbi share class. Total assets managed by AHL were at $22.8 billion as of March 31st.

Long-Term Comparison: 2001-2010 Annualized Return

AHL 12.5%
Hedge fund composite (HFRI index) 6.9%
World Bonds (Citigroup World Government) 4.8%
World stocks (MSCI) 1%

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Source: Man Group Fiscal Year 2011 report



 
This article was published in Opalesque Futures Intelligence.
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