Strong investor demand for Merill SICAV plc Funds

In less than two years, assets managed by Merill SICAV plc have surpassed the €60m mark as at the end of January 2018. This was stated by Jesmond Mizzi, chairman of Merill SICAV plc at the annual general meeting (AGM) of the company held last month and in which all resolutions before shareholders were approved.

The fund management company manages three fund strategies, the first one of which was launched in 2016. The more recent two funds were launched during the second quarter of last year and bring to the market two highly diversified strategies aimed at generating income and growth. All three funds are managed by Jesmond Mizzi Financial Advisors Ltd (JMFA), the local investment services firm which is celebrating its 15th year in business.

Following the AGM, Mizzi addressed investors’ of the SICAV and stated that through investment funds investors can easily diversify away the various risks inherent when holding direct investments. Over the years, the company directors set up strong relationships with international fund houses. Moreover, a robust internal analysis process helped the fund manager identify the best investment funds on a riskadjusted basis. The experience the directors gained throughout the years managing clients’ portfolios has led the company to market strategies which are built with investors in mind and based on the company’s local expertise and the aforementioned internal investment funds’ analysis.

All three Merill funds offer both distributor and accumulator share classes. Given local investors’ preference for income, the distributor share classes, pay interest income on a quarterly basis. Those investors who are not after income or wish to reinvest income in the same funds can opt for the accumulator share classes. In addition, investors can access these investment strategies both through lump sum investments and through regular monthly contributions.

The Merill Total Return Income Fund was launched in 2016. The fund aims to generate both income and capital growth over the long term. Mizzi said the fund kicked off with seed capital of €14 million injected by Atlas Holdings and has now reached the €30 million mark. This strategy provides investors with exposure to investment grade bonds, local corporate bonds and equities. The fund does not target a high level of income, but given its mix of assets, the strategy strives to generate a positive return in all market conditions. Merill Funds SICAV strongly believes that this fund should be a core holding in investors’ portfolios in order to add asset class diversification and downside protection when markets turn negative.

In 2017, Merill SICAV launched two new funds, one of which was the Merill High Income Fund whose primary objective is to generate income. Capital growth is a secondary objective which can be achieved if investors remain invested for the long term. The fund is highly invested in bonds and bond related investments given its income generation objective. In fact, as at end of February 2018, over 75 per cent of the assets managed by the fund were invested in direct bonds and third party bond funds. Fifteen per cent can be invested in equities. Mizzi stated that the demand for this sub-fund was huge and the assets under management had reached €24.4 million by the end of January 2018.

The Merill Global Equity Income Fund which was launched together with the Merill High Income Fund aims to generate capital growth and income to a lesser extent. The fund invests in a diversified portfolio of local and global equities and some bond exposure is also allowed. The Merill Global Equity Income Fund reaches its objective through investments in direct shares and equity-linked investment funds.

Mizzi concluded by stating that all three funds have different investment objectives and asset class exposure. During different stages of the economic cycle, different asset classes behave differently and cannot be expected to move up and down in tandem. As a result, diversification is key. Merill Funds SICAV is a strong believer of asset class diversification and believes that investors should diversify their portfolios across different asset classes in order to reduce default and concentration risks while at the same time have a diversified portfolio which can better protect value during different market periods. All three funds achieve a high level of diversification through investments in direct issuers and third party collective investment schemes. Diversification does not guarantee the value of the capital but it reduces significantly certain risks associated with investing.