It’s been a busy 18 months for Milltrust International Group, one of Singapore’s newest asset management businesses. Established in January 2011, just a month after founder?Simon Hopkins?arrived in the Lion City having sold his previous business to the London-based merchant bank, Close Brothers, the new firm has now launched an innovative range of?Dublin-based emerging markets UCITS funds, advised by its London affiliate, Milltrust International LLP.

“We have the unique status of serving as a fiduciary to our institutional clients through the?managed accounts platform?we have established in?partnership with State Street,?the world’s largest custody bank”, said Hopkins. “These funds are in every instance advised by the best local asset managers we can identify in the emerging markets world. In essence?the strength of Milltrust is our ability to deliver some of the world’s best partners across our platform in an easy to use, transparent, cost efficient and secure way”.

With the lion’s share of institutional fund flows still limited to a small coterie of big US fund managers,?Milltrust hopes to offer an alternative to the ubiquitous GEMS (Global Emerging Markets) funds, which invariably invest across all the EM geographies in sync with the MSCI benchmarks.

“We expect some of the better performers in the future will be in the faster growing capital markets of smaller regional economies within ASEAN, Latin America and Africa. Right now our funds cover most of these markets with managers for Greater China, Brazil, India and Latin America already appointed, and we expect to announce the appointment of a significant partner to manage our ASEAN offering imminently”, says?Eric Anderson, managing partner of the London affiliate.

“Our platform approach allows our investors to have all the benefits of diversification across geographies and managers, yet also allows them to express their own macro views by controlling the weightings of their allocations across the different funds and geographies”, he adds.

“The bigger GEMS funds are also constrained as to where they can invest by liquidity issues”, says?Alexander Kalis,?who heads up manager research for Milltrust. “What Mark Mobius thinks about sub-Saharan Africa or the Philippines or Vietnam may very well be fascinating but it’s largely irrelevant for investors in the geographical allocation of his huge fund”.

“These markets simply don’t feature in a benchmark constrained allocation, and that?s how all of these big boys invest”, he asserts.

In June, Milltrust launched its first three building blocks, as Anderson describes them, with the launch of the?Greater China, Brazil and Latin America funds. Seeded by a number of corporate and local authority pension fund investors, these managed accounts offer daily pricing and weekly dealing and are managed by heavyweight local names such as?Value Partners, the Hong Kong-listed asset manager, Brazilian powerhouse investment bank?BTG Pactual, and?Banco Itau, the largest bank in Latin America.?One sovereign wealth fund has also committed capital to the platform according to Milltrust.

The?Milltrust India?and?Milltrust ASEAN Funds?are set to launch in September. The former will be managed by?UTI Asset Management Company?(UTI), the oldest asset manager in India.

The Milltrust India Fund will be an actively run long-biased fund, domiciled in Mauritius. The reference fund has generated strong outperformance of the benchmark over a 5-year basis and has consistently ranked in the first quartile of its peer group. With USD 16 billion in assets under management, the firm has a 10% market share of the Indian fund industry’s assets. T Rowe Price’s acquisition of a 26% stake in the company in 2010 provides UTI with the support of a large institution capable of broadening and ramping up the firm’s global distribution ambition.

“We are also working towards the establishment of a?pan-African equities manager?with a leading African investment group”, said Hopkins, who earmarked first quarter 2013 for the launch. “By then, the platform will serve as a single fiduciary for 6 world-class investment managers, with one custodian, one administrator, and no additional or hidden fees”.

Given the safety features of a single custody platform, Hopkins believes this will prove the logical choice for institutional investors for a large part of their emerging market allocations, and as they seek alpha generating performance and move away from the GEMS managers and the inherent inefficiencies of MSCI benchmarking.

Despite being headquartered in Singapore, Milltrust’s first range of funds are Dublin-based UCITS, enabling them to be distributed across Europe.

“UCITS regulations offer a belt and braces regulatory framework that then permits the funds to be sold across Europe but also in a numerous other countries including Hong Kong and South Africa”, said Anderson. “We plan to distribute into our institutional client base in Asia, North America and Europe”.

Milltrust can already boast a presence in Canada, France and Switzerland, with distribution agreements in Japan and Australia ready for a formal launch this Fall.

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