Premier Fund Managers has launched a closed-end fund focusing on the Far East ex Japan sector, with ...
Premier Fund Managers has launched a closed-end fund focusing on the Far East ex Japan sector, with a 9.24% target yield.
The Dublin-based Premier Pacific Income fund will invest in Pacific Basin equities, global fixed interest products and other investment trusts during its seven-year planned lifetime
There are three asset types in the fund, each run by a different manager. The Pacific Basin equities segment, which comprises 47.5% of the fund, is being run by Richard Muckart of Premier Fund Managers, who will provide the primary source of growth for the fund.
The initial allocation was approximately 33% Hong Kong/ China, 16% South Korea, 12% Taiwan, 8% Singapore and 5% Malaysia and India, with the rest in Thailand, Indonesia and the Philippines.
Mike O'Shea, joint managing director at Premier Asset Management, said: "There are no pre-determined constraints on Richard as he is very much a stockpicker. For example, you do not want to be stuck with a full weighting in Hong Kong if Malaysia and Indonesia are flying."
The global fixed interest investments are managed by Richard Gluck of Mackenzie Investment Management and form 37.5% of the fund. This will be an actively managed portfolio, focusing mostly on corporate bonds.
About 50% of the portfolio will be in US bonds, 25% in the UK and Mexico and the last 25% will be global. But wherever the origin of the bonds, they will generally have to be dollar-denominated and listed in the US to be considered.
This segment will be hedged into sterling, as that is the currency of the fund's gearing facility. This contrasts with the equity segment, which will generally be unhedged.
O'Shea said: "For the equities, we will be running the currency. If you buy the market, you buy the currency, although the manager is allowed to hedge as he sees fit."
The last 15% of the fund is in investment trust shares. Managed by David Hambridge of Premier Fund Managers, this section will focus on gaining income for the fund.
The company was incorporated in Dublin and listed on the Irish Stock Exchange and started trading on 20 July. It has a secondary listing on the London Stock Exchange.
The issue costs were capped at 2% and there is an annual management charge of 1%. All investment management, administrative costs and interest will be charged to the fund's capital.
The initial investment came to £25m of ordinary shares, placed with institutions by Teather & Greenwood. Although trading has so far been slow, there have been market makers appointed, including Warburg and Teather & Greenwood.
There is a gearing facility provided by the Bank of Scotland at 85 basis points over Libor. It comes to around £20.5m and the intention was for the gearing to comprise 45% of the fund's initial gross asset value.
Ordinarily, the company will wind up on 31 July 2007. However, with a 75% shareholder backing, it could continue another seven years and following that another eight years, whereupon Irish law would force it to be wound up.
O'Shea said: "Investors require professional fund management, diversification, high dividend yields and prospects of capital growth. The cycle is right now for such a combination of investments, with recovery still at an early stage and current valuations relatively cheap."
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