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From segregated accounts to UCITS funds, BACCI

David Stevenson, 06/08/2020

South Africa-based asset manager BACCI has taken one of its segregated mandates and with the help of Prescient fund services has made it into a UCITS fund.

The BACCI Global Equity UCITS Fund will sit on the Prescient Global Funds Icav platform domiciled in Ireland.

Warren Quin, a director at BACCI and effective manager of the global equities fund, told Fundeye about the construction of the portfolio.

He said: “What we stick to quite vigilantly is to try to avoid making strong macro calls and avoid trying to take to regional plans and rather focus on the quality of the businesses.”

He added companies the firm favour have strong free cash flow, make little use of leverage with an emphasis on quality stocks. This is reflected in the top ten holdings of the fund, which contains three of the FAANGS, Facebook, Amazon and Apple as well as a couple of the US tech giants Chinese BAT counterparts, Tencent and Ali Baba.

The firm only recently added Ali Baba along with another Chinese giant jd.com although the former makes up for 4 percent of the portfolio so was quite a bold move. Given the tech centric nature of the firm’s holdings, Mr Quin said “I get a little bit frustrated when I read the sort of very generalised comments around bubbles in the tech sector,” in response to a question about whether tech is fully priced in given its performance during COVID-19.

“I suppose you can lump them into that sector (tech) but they are very different unique businesses and unlikely to be all the affected by a single economic event. I think that's the important thing for us. There are certain sub sectors within the tech sector but all different businesses that will expose you to different economic issues,” he summed up.

Regarding the decision to launch a UCITS fund, Mr Quin said it was to benefit the firm’s clients. A segregated mandate will require around $200,000 to get running and this fund allows those investors who don’t have that kind of money to enjoy the firm’s portfolio management skills. There’s also tax considerations for BACCI clients if the fund is not structured in a UCITS framework, with South African investors facing tax bills up to 20% otherwise.

Although the fund doesn’t make regional calls, when it comes to emerging markets Mr Quin seems fairly agnostic. “On average, I think we were not necessarily going to be taking a big call in emerging markets, but it's not to say we would exclude companies from those regions,” he said.

When it comes to the funds size, currently its seeded with around $6 million although Mr Quin hopes that will reach $50 million in the next six to nine months. With Prescient acting as the ManCo for the fund, this new offering to the global equities sector could make hay, it’s a growth fund in a growth market so has the components to succeed.

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