During the second half of 2018, E.I. Sturdza Strategic Management Limited (“EI Sturdza”) has reviewed its product offering in light of the current macro environment and concluded that the market conditions have evolved through the latest market cycle presenting certain challenges and also investment opportunities.
Against this backdrop, EI Sturdza has determined, in consultation with the Board of Directors of the EI Sturdza Funds plc, to close the following Funds in December 2018, whilst simultaneously launching two new funds, which we believe are better placed to provide value to our clients in the new market environment.
Funds to be closed:
The decision to close these funds is purely reflective of the view that the macro economic environment has evolved since their launch and as such their strategy and focus is less suited to the environment that is foreseen. EI Sturdza is therefore looking to adapt its offering by proposing investment alternatives which will continue to meet our investors’ needs.
To this end, EI Sturdza is pleased to advise that two new sub-funds of the EI Sturdza Funds plc are to be launched in December 2018, the Sturdza Family Fund, a multi asset vehicle and the Strategic Bond Opportunities Fund, offering a core exposure to fixed income markets; these new sub-funds are less constrained than the previous mandates, allowing the investment teams greater flexibility to adjust the shape and exposures within the portfolios to reflect the ever changing investment environment.
Introducing the Sturdza Family Fund
In 2011, Eric Sturdza identified an opportunity to invest in certain US companies, given the divergence between their valuation and growth rate, leading to the launch of the Strategic US Momentum & Value Fund in 2012. The investment team adopted a clearly defined investment methodology, with a focus on identifying companies with stable, non-cyclical growth, which trade at low multiples, enabling investors to benefit from the continuous increase in the companies’ profits, but at the same time ensuring an attractive risk profile.
In light of the evolution in the macroeconomic environment since the launch of the Strategic US Momentum & Value Fund and discussions between EI Sturdza and Banque Eric Sturdza SA, as the Investment Adviser, it was concluded that the closing of the Strategic US Momentum & Value Fund in favor of the Sturdza Family Fund would be beneficial to investors, providing:
- a diversification in the geographical universe, expanding to include global developed markets, which through the most recent cycle did not benefit from the same increase in valuations as the US market; and
- a widening of the investment universe to encapsulate bond instruments, taking advantage of the currently positive rates in the US, supporting diversification and reducing volatility within the portfolio over the long term.
The new strategy will therefore retain Eric Sturdza's investment philosophy at its heart, focusing on high growth and stable companies, but including more diversity and complementary geographical and financial opportunities.
The broadening of the investment universe to include bond instruments primarily aims to reduce the volatility of returns, which the team believe will enable the new Fund to navigate periods of uncertainty more robustly, giving the new Fund the ability to redeploy capital when markets allow it. The new Fund aims to invest with a medium to long-term perspective. Eric Sturdza’s strong conviction regarding the creation of this new investment strategy is that the Fund will be an important vector of his family and patrimonial strategy.
In order to implement this mandate, the investment team has been expanded, now consisting of six individuals, with responsibilities split across the following functions:
• Asset Allocation – dynamic management of the Fund’s exposure to the various asset classes.
• Equities. Derivatives and Cash – 3 individuals.
• Fixed Income – 2 individuals.
Introducing the Strategic Bond Opportunities Fund
Over the past decade, EI Sturdza successfully launched three fixed income funds, pursuing different objectives and strategies, namely the Strategic Euro Bond Fund (2009), Strategic Global Bond Fund (2012) and Strategic Quality Emerging Bond Fund (2016).
As indicated above, EI Sturdza will be consolidating its fixed income offering and will be launching the Strategic Bond Opportunities Fund in December 2018. The new Fund will allow the investment team to readily adapt the portfolio to prevailing conditions within the bond market, whilst at the same time taking account of the investors’ needs, not only in terms of strategy but also critical size, benchmark choice and management fees.
The main features of the new Fund are:
- A Total Return philosophy (USD denominated).
- A benchmark, representative of the current market.
- A selection of the "best of" the three fixed income funds as a core portfolio.
- New investment opportunities to allow for more dynamic management.
- Competitive management fees and a lower TER.
The new strategy will be implemented by the investment team appointed to EI Sturdza’s current fixed income offering.
Initial shareholder communications with regards to the closing of the existing funds, as well as the updated prospectus for the EI Sturdza Funds plc and KIIDs associated with the Sturdza Family Fund and Strategic Bond Opportunities Fund are available via EI Sturdza’s website www.eisturdza.com
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