Investec fighting fit for the Ucits fray

Twelve years on from its arrival in Britain, Investec says its core disciplines have prepared it well to scale the rankings in the new regulatory battleground, writes Neal Underwood.

“One of their most successful in terms of gathering assets must be the Emerging Market Debt fund,” he says. “They’ve obviously got some good managers, like Alastair Mundy in the UK, who has built up a decent record through thick and thin.”

In the past, Hambidge has invested in the UK Smaller Companies fund, and he rates fixed income manager John Stopford as “pretty sensible”.

One development very much on Investec’s agenda is Ucits III. “We wholly embrace the subject,” says Aird. “It’s philosophically sound to give managers a much wider brief to deliver both alpha and beta.”

He notes that such vehicles come with a health warning and require adequate risk controls. “In the commodities space, Enhanced Natural Resources has got Ucits III powers. It aims to outperform commodities funds with lower volatility, capturing the majority of movement when markets are positive and dampening things on the downside.”

Aird sees this fund going head to head with BlackRock Gold & General and JP ­Morgan Natural Resources. “We’re trying to capture somewhere in the region of two thirds to three quarters of upside but with half the volatility,” he says. “In a choppy market and in a falling market you will get outperformance. If you are a 21st century manager, why would you only want to go long?”

In the most recent Investment Management Association table ranked by assets under management, Investec comes 26th. Aird’s short-term aim is to get the firm into the top 20. “Royal London, HSBC and Aberdeen are just above us. I suspect we’ll have a good go at those over the next few months.”

In Aird’s view there are two big convergence trends at present. One is that retail and institutional are becoming ever closer with regard to mandate requirements. The other is between traditional and alternative assets. “Ucits III is the great battleground between hedge funds and traditional,” he says.

“It’s becoming incredibly competitive, but Ucits III is the way forward. We’re absolutely focused on making sure Investec Asset Management in the UK is properly constructed for a post-RDR [retail distribution review] world.”

He says the firm will have more than enough to keep it busy in its pursuit of a top 20 spot.