Fund Launch Data Indicates Recovery (Of Sorts) for Managers

Mutual fund launches in the first half of 2014 exceeded 1,000 for the first time in three years, while the number of funds closing or merging has fallen to a five-year low, according to Lipper.

The fund research house found that 518 new funds were launched across Europe in the second quarter, the highest level for Q2 numbers since 2011. It brought the total launches in the first six months of the year to 1,059.

A total of 1,359 funds were either liquidated or merged away in the same six-month period, Lipper data showed—the lowest figure in five years of data from the company. The number of closures has exceeded the number for launches in the first half of each of the last three years as a wave of new asset management rules—coupled with macroeconomic uncertainty—has put pressure on costs for fund managers.

However, Detlef Glow, head of Lipper EMEA research, said the difference between closures and launches had narrowed in the past three years, indicating that the number of funds registered for sale in Europe—currently 31,942, according to the data provider—could begin to expand again in 2015 after a period of consolidation.

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Glow said tensions between Ukraine, Russia, and the European Union may have suppressed product launches in recent months, and cited the Alternative Investment Fund Managers Directive (AIFMD) as another key regulatory concern for providers.

“With the AIFMD gone live on July 22, both fund management companies and regulators are pushed to ensure the corresponding applications have been submitted,” Glow said.

“Since, during the first phase of new regulations, they are in some cases a hindrance for the launch of new products, the introduction of AIFMD might have had a negative impact on the launch activity of fund promoters during the first half of 2014.”

Australia’s $101 billion Future Fund has promoted Raphael Arndt to CIO and is seeking to grow its investment team with two appointments.

Arndt has worked at the Future Fund—which manages assets for the Australian public sector pension—since 2008 as head of infrastructure and timberland. In a statement, the Future Fund said he would begin his new role immediately.

Arndt succeeds David Neal, who was appointed CEO earlier this year. Before joining the Future Fund, Arndt worked at Melbourne-based infrastructure specialist Hastings Funds Management. He has also held a policy role at the Australian Council for Infrastructure Development.

The promotion of Arndt, an engineer by training and a specialist in infrastructure, highlights the Future Fund’s desire to boost its exposure to real assets to nearly 20% of the portfolio.

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Neal said the new CIO “has the commercial and leadership skills to help us refine our investment thinking and processes. He is the ideal person to foster the collaboration and contest of ideas that is central to our investment process.”

Meanwhile Stephen Gilmore, head of investment strategy, is to take on responsibility for managing and monitoring risk in the portfolio, alongside his existing role that involves a focus on portfolio design and macroeconomic research. He joined the fund in 2009 and was appointed to his current role in 2010. He has worked at AIG, Morgan Stanley, the International Monetary Fund, and the Reserve Bank of New Zealand.

The Future Fund is on the hunt for an additional risk management role “to provide further depth and focus in our investment risk management and reporting capabilities”, Neal said.

Barry Brakey, head of property, is in charge of the infrastructure and timberland team while the fund seeks a permanent replacement for Arndt.

The appointment follows the hire of Joel Posters as head of environmental, social, and governance risk management in May.