A3E Capital Launches EM Bond & Currency Fund

Sep 26 2012 | 9:55am ET

A3E Capital SICAV has launched a $20 million Malta-based emerging markets bonds and currencies fund.

The A3E EM High Yield Fund, run by A3E Capital Managing Partner and CIO Aldis Reims, has been seeded by investors “who have experienced successful asset management relationships with fund principals,” according to the fund launch announcement. It will invest in an emerging market bond portfolio with consistently short average duration (3-years maximum), deploy bond trading strategies and allocate part of its assets to emerging market forex strategies.

The fund will have a strong East European bias, although it may invest in other emerging markets, including Latin America and Asia.

Said Reims, in a statement: “Eighty percent of the global economic growth  originates in emerging markets. As a group, emerging market countries are less leveraged and do not suffer from the same causes of instability as developed markets.”

Reims, the former CEO of Latvia's Bank Baltikums, has more than 20 years of institutional asset management experience in emerging markets. He and his fellow portfolio managers have employed the strategy profitably in various market environments during the last decade, have previously worked as a team and are themselves major investors in the fund.

“The intention is to deliver better risk reward ratio over the economic cycle with capital preservation in mind. We ourselves have a substantial position in the fund and have designed the strategy as we would like our own money to be managed. Basically, the aim is to reduce return volatility and preserve capital at all times while constantly monitoring the market for profit opportunities. Our experience tells us that this way we achieve a bit less performance in strong uptrends, but then we have much less downside risk,” said Reims.

The fund targets returns of 10% p.a. after fees and has been licensed by the Malta Financial Services Authority to target qualifying investors. The initial subscription period ends on September 30, 2012.

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