US-headquartered asset manager GMO, co-founded in Boston by Jeremy Grantham over four decades ago, recently entered the Spanish market with two of its flagship liquid alternatives funds, as this publication had revealed earlier this month.
GMO has chosen the GMO Global Real Return Ucits Fund and the GMO SGM Major Markets Investment Fund to be distributed in Spain but also in Italy, based on a combination of factors ranging from their proven strength in the long-term, valuation-based asset allocation, an local investor demand.
GMO Benchmark-Free Allocation Strategy, which is available via the GMO Global Real Return Ucits fund, is a multi-asset unconstrained strategy that was launched in 2001, based on a dynamic, valuation-driven asset allocation approach to generate long-term annual returns of 5% over inflation (net of fees).
GMO Systematic Global Macro Major Markets Strategy, available via the GMO SGM Major Markets Investment Fund, is the liquid alternative version of a hedge fund the firm has been running since 2002.
The strategy combines long-term valuation signals with shorter-term sentiment indicators, with the goal to deliver absolute returns of 5% over cash by taking long and short positions on equities, bonds, currencies and commodity indices.
"Over time this strategy has demonstrated a low correlation to traditional asset classes making it an appealing diversifier for investors," GMO underlines.
GMO says it is looking to further develop its business in the Southern European markets as well as catering their regional preferences in terms of vehicle´s type and platform´s availability.
"In Southern European markets, we are proactively engaging with a range of potential clients and platforms, such as Allfunds, able to provide us with the opportunity to grow our business in these countries. However, there are some inherent differences between different markets in Europe, likely to be benefited from a tailored approach.
"For example, we are conscious that both Italy and Spain have a large amount of retail savings, which are accessible through open-architecture distribution channels of local banks.
"This has both implications for the suitability of vehicle type, and for the accessibility through local platforms such as Allfunds, both important factors to consider when assessing how to gain traction in these markets."
Institutions, family offices, advisers, intermediaries & wealth managers are among the firm´s clients.
The institutions range in type from corporate and public defined benefit and defined contribution retirement plans to foundations, endowments, and sovereign wealth funds.
The manager has worked with families since its foundation. It also collaborates globally with a broad range of investment advisers, providing the capabilities, resources, and insights they need to service their mutual clients.
But the manager also positions itself as a resource in a broader sense, aiming not only to provide funds, but also solutions and insights being sought out by advisers, private banks, wealth managers and other intermediaries.
"We are keen to ensure that we identify the right strategy for each potential client by considering various factors including risk appetite, desired exposure, structural requirements, and how we can complement any existing managers that they invest with, especially given that our valuation approach can often be a good diversifier."
EMD STRATEGY TO BE LAUNCHED
In addition to the two Ucits alternatives funds, GMO is set to launch a new vehicle for its EMD strategy in the Southern European markets.
It has managed a hard currency EMD strategy since 1994, rooted in looking to valuations and with a strong focus on bottom-up selection among sovereign and quasi-sovereign issuers.
"We believe that our approach provides our clients with the best chance for long-term success in this asset class while differentiates us from other emerging debt managers who focus on top-down country, currency, or corporate investments. For better suitability to investors in Southern Europe, we are setting up a Ucits vehicle in addition to the existing funds."