INVL Asset Management, one of Lithuania’s leading asset management companies, has launched a new mutual fund – the INVL Absolute Return Subfund – which is able to invest in diverse asset classes without restrictions on the proportions of the fund’s assets that may be allocated, at times thus even reaching 100% equity or 100% bonds. The fund’s main principal for choosing investments will be expert assessment in terms of regions, countries, asset classes or specific investment ideas.
The new fund intended for retail investors began operations on 22 January this year after the Bank of Lithuania approved the founding documents of the INVL Specialized Umbrella Fund as a new specialized in investing to transferable securities umbrella investment fund, and of the INVL Absolute Return Subfund as its first subfund.
“Until now we’ve managed products focused on Central and Eastern European stocks and bonds and emerging market bonds, which, even when the market’s direction changed, had to stick to a set investment strategy. The new fund won’t be tied to any specific asset class or region and will invest wherever the team of investment managers sees the biggest return potential,” said Vaidotas Rūkas, Chief Investment Officer at INVL Asset Management.
He said that due to its relatively small size, the fund will able to invest more than is usual in small- and mid-cap companies that are characterized by lower valuations and so have bigger growth potential or higher dividend yields.
Also noteworthy about the fund is its ability to pay dividend to its participants. If the fund’s assets under management at the start of a year exceed EUR 10.5 million and the fund meets other established criteria, then, the management company can adopt a decision to pay dividends, and when it does so, the dividends will be no less than 5% of the fund’s unit value. The new fund is intended for investors who are able to assume high risk over the long term. The recommended holding period is more than 5 years. The minimum investment amount is EUR 10 000.
As the fund doesn’t have restrictions, Rūkas noted, it will be flexible and able to invest in what its managers consider the best ideas or, in times of risk and uncertainty, reduce investment risk to a minimum. “This is a chance to entrust investments to a team of professionals that will choose, on behalf of the investor, when and what to invest in or sell. Funds of this type are common in the world, though in Lithuania until now there have been few,” he said.
A management fee of 1.5% will apply for investors in the fund, along with a 15% success fee calculated on a high-water mark basis and with a 5% hurdle rate. A distribution fee will also apply, ranging from 0 to 2% depending on the amount invested. The target size of the fund is EUR 10 million; its distribution may be halted when the level of EUR 9.5 million is reached. The fund will be distributed by INVL Asset Management and the financial brokerage firm INVL Finasta.
Until now, INVL Asset Management has operated five mutual funds intended for retail investors and focused on specific asset classes or regions, and nine 2nd and 3rd pillar pension funds. The funds managed by the company have performed well in recent years. According to the Bank of Lithuania’s information as of the end of 2017, INVL Asset Management’s pension funds were ranked first – ahead of the country’s other pension funds – in all categories in terms of their returns for 2017 and for the past five years. The company’s mutual funds, meanwhile, have earned top or high-level ratings from international rating agencies for specific periods and based on varied criteria.
INVL Asset Management is part of the Invalda INVL group, whose companies manage pension and mutual funds, alternative investments, private equity assets, individual portfolios and other financial instruments. More than 185 000 clients in Lithuania and Latvia as well as international investors have entrusted them with managing over EUR 575 million of assets.