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17 Jul 2012

Setting Up Shop In Singapore

Fifteen years after its first foray into the global sphere in Guernsey, Foord launched its second foreign domiciled unit trust on 1 June in Singapore. CAROLYN LEVIN, managing director of Foord (Singapore), explains the strategy and the rationale behind the move.

Foord first managed a global investment portfolio when it opened the Foord International Trust in Guernsey in 1997. That decision was motivated by South Africa’s relaxation of its complete exchange control regime, allowing institutional investors access to foreign assets via the asset swap mechanism. Rather than appoint sub-managers for the foreign asset component of the portfolio, Dave Foord (joined at the time by Bruce Ackerman) believed Foord could do things better by applying the same investment philosophy and approach that had worked so successfully in South Africa. This was not mere bravado on their part, as the success of the Foord International Trust (FIT) has proved.

FIT has by necessity been a very cautiously managed, conservative portfolio. This is due to its “one size fits all” status as the sole foreign asset component of all Foord’s South African portfolios that have an international element.  This conservative approach has met the needs of portfolios but has left an opportunity for a more aggressively positioned foreign portfolio. Moreover, unit trust legislation in South Africa has limited the inclusion of foreign unit trusts (such as FIT) to 20% of portfolio. From 1 July, the regulators have allowed 20% per fund up to an aggregate limit of 80% of portfolio. Funds like the Foord Balanced Fund therefore may not invest more than 20% into FIT but are permitted to invest 25% offshore (in two or more foreign unit trusts). 
 
The changing regulatory environment and opportunity for a more aggressively styled global portfolio led us to conceive an international equity portfolio, namely the Foord Global Equity Fund. We chose to domicile the fund in Singapore which is challenging its regional rival Hong Kong for supremacy as Asia’s financial services hub. The domicile also hints at the investment universe of the new fund. Unlike FIT, it will not routinely restrict itself to shares listed in developed markets. While we like the governance structures associated with a developed market listing, there are undoubtedly some attractive investment opportunities in developing markets. The Foord Global Equity Fund will be far more active in this space than FIT has been.

While the fund builds an investment and operations track record in Singapore, the regulator in that market has requested that the fund remain closed to direct retail investors. We are, however, able to implement a South African feeder fund structure(similar to the Foord International Feeder Fund). We expect our applications for the approval of the feeder fund to be approved soon. Watch our website for further developments.

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