First State soft closes specialist funds
First State Investments is to soft close a number of specialist strategies in order to protect the interests of existing investors but savers who maintain the level of existing contributions will not be affected.
The firm said the measure was to protect the interests of existing investors, following strong inflows in recent months.
Soft-closure is a means of dissuading clients from investing new money into a fund by making the initial charge compulsory. First State will credit all initial charges on these specialist funds to the relevant funds themselves for a transitional period of up to 5th April 2012.
Gary Withers, regional managing director for EMEA at First State, said that over the last couple of years, inflows into the specialist Asia Pacific and Global Emerging Market funds have grown rapidly.
“Having monitored the situation carefully, we believe that we are nearing the point beyond which capacity issues could start affecting performance of these funds and, more specifically, restrict their ability to invest in smaller companies. So that we can continue to invest efficiently for the benefit of our existing investors and stay ‘true to label’, we have decided to soft-close some of our Asia Pacific and GEM funds.”
Eight years ago the First State Asia Pacific and the First State Global Emerging Markets funds were soft-closed. At that time the First State Asia Pacific Leaders and First State
Global Emerging Markets Leaders funds were launched which, in contrast to the two original funds, do not invest in smaller companies. They are therefore not exposed to the same extent to potential issues with capacity in difficult market conditions, and are not affected by the move, which is effective from January 1st 2012.
However, the following subfunds of the First State Investments ICVC will be soft-closed from January 1st, 2012:
– First State Asia Pacific Sustainability First State Indian Subcontinent
– First State Global Emerging Markets Sustainability First State Latin America
– First State Greater China Growth
The initial charge on these funds is 4%. The decision will have no impact on investors’ ability to make redemptions, nor does it mean that the funds will be closed indefinitely.
First State has also taken the decision not to accept further inflows through its offshore Irish-domiciled VCC umbrella into the First State Indian Subcontinent and First State Hong Kong Growth funds.