UCITS III Fund from Morgan Stanley - Analyst Blog

On Monday, Morgan Stanley (MS) announced the launch of its first Undertakings for Collective Investment in Transferable Securities (UCITS) III Fund. 

 

UCITS follows a set of European Union (EU) directives that are aimed to provide collective investment schemes that operate freely in the EU based on the authorization of a single member state. However, many EU member countries have imposed additional regulatory rules to protect local asset managers.

 

FundLogic, the brand name for Morgan Stanley’s structured fund platform on which the UCITS III has been launched, offers both UCITS III and non-UCITS funds on a global basis. The platform provides products ranging from simple index funds to complex investment solutions. 

 

The UCITS fund focuses on event-driven investment strategy, including stressed and distressed credit, special situation strategies and mergers & acquisitions. The management fees for UCITS fund will be 1.5% along with performance fees of 15% on the amount invested. 

 

At the time of launch of the UCITS fund, assets under management are expected to be approximately $25 million. The aim of the fund will be to mobilize additional funds to the tune of $300−$500 million from institutional clients by 2011. 

 

Though the main focus of the UCITS fund will be on Europe, it will also be marketed to the institutional investors across the world. The fund, which will be offered in euro, dollar and sterling share classes, has a minimum investment value of 1 million in each of the three currencies.

 

Initially, two types of investors will be targeted for investments in the Morgan Stanley’s UCITS fund:  

The Ireland-domiciled fund will be managed by P.Schoenfeld Asset Management LP (PSAM). The fund has been named the MS PSAM Global Events UCITS Fund and will have weekly dealing. 

 

On June 2010, Deutsche Bank AG (DB) and Winton Capital Management had announced the launch of a UCITS III fund. The investors of this UCITS III fund gain from the provision of weekly liquidity with fund net asset values (NAVs) published on Reuters, Bloomberg and other online sites. 

 

Morgan Stanley is confident of a huge demand from investors to access alternative asset manager expertise through the UCITS funds. The company is at present seeking regulatory approval for funds managed by leading alternative asset and is looking forward to launch more such funds in the coming months.

 

Morgan Stanley holds an industry leading position, with a diversified portfolio, both by geography and product. Although certain risks prevail due to various regulations, the company continues to focus on right-sizing its risk appetite internationally.

 

Morgan Stanley currently retains a Zacks #3 Rank, which translates into a short-term 'Hold' rating. Also, considering the fundamentals, we are maintaining a long-term Neutral recommendation on the stock.