Fabien Pictet fund closure shows hard times for non-EM products

The seemingly insatiable appetite investors had for developing markets most of this year has been reflected by London’s Fabien Pictet & Partners closing a fund concentrated on developed markets, after it gathered $3.3m one year since launch.

In a suggestion of where greater investor interest may lie these days, FP&P is giving shareholders in its Global Endeavour Developed Markets fund the option to switch into its FPP Global Emerging Markets fund.

The news from the boutique came as data from Britain’s Investment Management Association found funds under management in global emerging markets equities products rose 37% in the year to May, to stand at £13bn. This was more than double the funds the strategy held in May 2009.

Baring Asset Management found 12% of investors are looking for exposure to emerging markets over the next 12 months, up from 9% two years ago.

Rod Aldridge, Baring’s head of UK retail distribution, said: “We are seeing an increasing number of investors looking for exposure to emerging markets year-on-year, and we anticipate this trend will continue given the enormous potential for growth compared to developed markets.”

Seeking opportunities elsewhere last year, FP&P launched its Ucits compliant long-only developed markets equities product. One year on, yesterday, its directors decided to shut it down. The London-headquartered manager did not return calls seeking further comment.

FP&P is arguably better known for its emerging markets expertise, and according to a company overview published on the firm’s website in August, Global Endeavour is the only advanced markets product in its stable.

According to the presentation, FP&P has three global emerging markets funds – two long/short and one long-only – plus portfolios focused variously on Japan and Asia Pacific, South Korea and Greater China, emerging Europe and the Middle East, and a closed-ended portfolio focused on Ukraine.

The directors of developed markets portfolio said in an announcement today: “The DM fund currently has a net asset value of approximately $3.3m with a total expense ratio of 5%. Based on ongoing monitoring of the performance of the DM fund, FPP Asset Management LLP, the investment manager, is of the opinion the fund is not commercially viable, due to its size [as] the size ultimately reduces the return to investors.”

The trend towards EMs equities funds reversed, albeit modestly, last week, according to data from fund flows monitor EPFR. Emerging market local currency bond funds, meanwhile, were among few strategies to continue registering net inflows.

EM equities funds posted outflows of $2.77bn – mostly Asia ex-Japan funds, over concerns of slowing exports – or about half the week’s $5.81bn outflows from all share funds.

Money market funds, and products focused on countries such as Germany and Switzerland were beneficiaries.

For a fifth week running US equity funds suffered outflows – the longest losing streak since January 2010 – as investors continued to digest the credit downgrade that Standard & Poor’s slapped on America’s Treasuries.


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