In light of strong growth in assets under management within the Strategic European Smaller Companies Fund (the “Fund”), E.I. Sturdza Strategic Management Limited (“EI Sturdza”), in consultation with the Investment Adviser to the Fund, has determined that the Fund will soft close to new investors when the assets reach EUR 230 million and hard close to all additional investments at EUR 250 million.
The Fund is a long only equity fund which invests in Western European small and mid cap companies. Given the size and depth of this market EI Sturdza and the Investment Adviser recognise that there is limited capacity with regards to the investment strategy, resulting in a decision to stop accepting applications for shares when the AUM of the Fund reaches EUR 250 million.
Having launched in May 2015 with an AUM of approximately EUR 30 million, the asset base of the Fund remained stable through to Q4 2016 when investor flows accelerated, closing the year with an AUM of EUR 65 million. This growth trajectory continued into 2017 and as at the end of August 2017 has resulted in an AUM of EUR 173 million.
SOFT / HARD CLOSE
To ensure that the Fund can continue to deliver its investment objective for our investors, EI Sturdza, in consultation with the Investment Adviser has recommended to soft close the Fund at EUR 230 million and hard close at EUR 250 million, believing that this is in the best interest of our valued investors and will avoid a dilution of performance as a result of an increasing AUM. The Directors have approved the introduction of a soft and hard close framework as described in this announcement with immediate effect.
EI Sturdza will continue to actively monitor the development of the Fund’s AUM and will instruct the Fund Administrator, SS&C Financial Services (Ireland) Limited (“SS&C”), to cease accepting subscriptions from new investors – those that are not contained on the share register of the Fund – when the Fund’s AUM reaches EUR 230 million, the soft close threshold. Once the soft close threshold is reached, existing investors will be able to continue subscribing for shares in the Fund on a first come first served basis, until the hard close threshold of EUR 250 million is reached, at which point SS&C will cease to accept any new applications for shares in the Fund. Should trades be received on any valuation point that would result in the AUM of the Fund exceeding the hard close threshold, such trades will be prorated to ensure the equitable treatment of investors.
1. For the avoidance of doubt, the implementation of the soft or hard close limits within the Fund will have no impact on the redemption cycle or process.
2. Should either the soft or hard close thresholds be reached and the AUM subsequently decline, EI Sturdza retains the right to reopen the Fund for additional subscriptions. The soft and hard close limits will be retained, as such should the AUM decline below the hard close limit, but remain above the soft close limit, applications will only be accepted from existing registered shareholders. If however the AUM declines below the soft close limit then EI Sturdza retains the right to reopen the Fund for applications from all existing and prospective investors.
3. EI Sturdza and the Investment Adviser will continue to monitor the Fund’s investment universe to establish whether prevailing market developments have an impact on the capacity for the investment strategy. As such EI Sturdza, in consultation with the Directors, retain the right to adjust the soft and hard close limits accordingly should this be deemed appropriate.
4. Subsequent notices will be issued to our investors and prospects as to future developments as follows:
• The soft or hard close limits being reached and the effective dates;
• A subsequent decline in the AUM below the EUR 250 million for existing investors or EUR 230 million for existing and prospective investors.
• Any adjustment to the soft or hard close thresholds as detailed herein.