Lenneke Arts

Providers have been storming into the rapid growth of private equity as an asset class, reflected in the national and international growth of feeder funds and fund of funds. However, these product groups are associated with high pricing and common misalignments, according to Koen van Mierlo and Emile van Thiel of Bluemetric, in a recent interview with Investment Officer NL. 

More lenient EU regulations are about to make it possible for providers to offer private investment funds to private investors. Private products such as semi-liquid funds and European Long Term Investment Funds, or Eltifs - which can be marketed also to retail clients under a European passport, often via Luxembourg - will gradually change the private equity landscape. “The split that the market currently finds itself in will then be resolved,” said Wim Nagler, head of institutional clients at Schroders.

In public markets, a well-known proposition is that at the moment that everyone steps in, the red flag should be raised: probably the best time is over. Investors in private markets, where effects are generally felt later, do not worry so much. Besides, there is not much you can do as a private investor.

Alarmed efforts by European green and microfinance fund providers, led by Dutch firms Triodos and ASN, to get the European Commission to rectify what looks like an omission in its proposed investment fund legislation risk being dismissed as “small beer” and may be overlooked. “We have to keep making noise.”

Product launches for Article 8 and 9 funds, sustainability funds and ESG funds are all over the place, but there is no insight into which fund houses are actually putting a lot of assets to work sustainably. Enquiries with Morningstar show that it is certainly not (only) the usual names that have the most assets in sustainable funds.

In the search for yield, some high yield investors are shifting to a broader mandate to invest in “below B”, the riskiest segment of high yield. PGIM recently repositioned two high yield funds to invest in CCC and CC bonds.

Fund selectors are by no means in pause mode around the introduction of the next level of sustainability regulation, now that SFDR level 2 has been postponed by six months. They are busy collecting data, against a background of seemingly increasing complexity, according to responses to Fondsnieuws from chief operating officer Monique Molenaar-Vader of IBS Capital Allies and chief investment officer Kees Verbaas of Altis Investment Management.

“Although we are number twelve in the world in order of assets under management, we are a relatively unknown player. Come to think of it, we’re probably the biggest asset manager people have never heard of,” said Simon England-Brammer (pictured), senior managing director EMEA and APAC of Nuveen. 

With a return of 46 per cent year-to-date, the ACATIS Datini Valueflex is on a roll this year. The 10 per cent allocation to cryptos, via an investment in three crypto ETFs and a direct investment in Coinbase, have helped considerably. But at the top is vaccine maker BioNTech, which is responsible for 11 per cent of the return, according to a conversation with fund manager Hendrik Leber (pictured), who called the fund the “chilli pepper of an investment portfolio”. 

The ongoing, rapid consolidation in asset management is exposing problems around rebranding. “Crucial” is untangling one’s own story from broader sector narratives, in this jumble of mergers and acquisitions.