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BAM moves to Ucits III ahead of retail drive

Baring Asset Management is making its unregulated multi-manager funds Ucits III-compliant in a move to increase its brand awareness among IFAs in the retail market.

Its three Dublin-domiciled multi-manager funds – the extended risk portfolio, optimum risk portfolio and reduced risk portfolio – were launched in November 2004 and aimed at pension funds.

They have a minimum investment of £250,000, which will reduce to £5,000 on conversion to the new structure.

All three funds are multi-asset portfolios that aim for absolute returns and are risk-graded. As qualified investor schemes, they are currently able to hold BAM’s FSA-recognised multi-manager funds, which are already available to retail investors. This will change when the funds convert to Ucits III and, as a result, the total expense ratio of each portfolio will fall.

BAM intends to distinguish itself from the competition by positioning asset allocation as the key driver of returns, with fund selection a secondary consideration.

It has almost doubled the funds’ exposure to hedge funds in the last year to the maximum permitted weighting of 30 per cent. This reflects the multi-manager team’s cautious view of markets and expectation that volatility will increase.

Director of multi-manager investments David Coombs says: “We have increased hedge fund exposure because we were cautious ahead of the summer and wanted to take some risk out of the portfolios. Having seen low volatility for some time, we felt this is not sustainable and hedge funds do better when markets are volatile.”

“We are converting the funds to Ucits III because we want to bring them to a retail audience and it is the best way to benefit current investors. We have been in the background for a long time and are ready to ratchet up our profile in the retail market.”

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