12/10/2011 Author: Tony Griffiths

Inflows at CQS Ucits give Schroder GAIA a boost

Strong inflows at CQS’s credit-focused Ucits fund have proved a bright spot during a trying period for Schroder GAIA, the Ucits platform on which the entity sits, with the compliance backlog from the Ucits IV legislation pushing the umbrella’s plans for new launches back until 2012.

Launched in March with $20m in assets, Schroder GAIA CQS Credit recently passed the $150m mark, Eric Bertrand, director at Schroders NewFinance Capital, told HFMWeek. “CQS has had a very strong start,” he said.

Although the rise is mostly down to inflows, performance has also been strong, with the fund up around 7% since inception.

Meanwhile, the other externally managed Ucits funds on the Schroder GAIA platform, Egerton’s European equities vehicle and Sloane Robinson’s emerging markets strategy, are believed to have struggled – in line with the wider industry.      

The launch of the CQS fund and the passing of the $1bn AuM mark in June topped a successful first half of the year for the GAIA platform. Further launches, however, have been put on hold following the debut of Ucits IV in July.  
“We’re expecting to be more active in the New Year,” said Bertrand. “New launches have been postponed until then in order to allow for the fund documentation to be updated to comply with Ucits IV regulation.”

According to Stephen Carty, partner at Maples and Calder in Dublin, compliance issues relating to Ucits IV are proving burdensome for managers.

Ucits IV requires all managers to produce a concise two-page document, the Key Investor Information Document (Kiid), for every share class, condensing information on performance, fees, material risks and policy.

“There’s a real concern among managers about putting it together and how much work it entails,” said Carty, referring to the Kiid. “There’s a lot of work to do. It’s a brand-new landscape for them.”

In March, Noel Fessey, managing director of Schroder Investment Management Luxembourg, warned that the cost of creating Kiids would be twice that of the simplified Ucits III prospectus.

Schroder GAIA is hoping to launch several new sub-funds in 2012, Bertrand revealed, potentially doubling the platform’s current $1bn AuM.

Two long/short equity managers, one likely to be US-based, and two funds in the macro, systematic trading and FX space, are currently on the cards.