QIC builds, seeds emerging markets multimanager fund

The $80 billion Queensland Investment Corporation (QIC) has built an emerging markets multimanager trust and seeded it with $130 million.

Dubbed an emerging markets ‘solution’ by QIC, the Emerging Markets Equity Fund has segregated mandates with three underlying managers implementing different strategies: closed-end fund arbitrage, fundamental stock-selection and a country-focused, top-down quantitative manager. Greg Clarke, director of international implemented equities at QIC, said the fund aimed to provide “a diversified entry-point into emerging markets”. While Clarke refused to name the three managers, he said that QIC had been using the closed-end fund arbitrage manager for two years for another vehicle. The manager trades holdings in the equivalents of listed investment companies (LICs) in emerging market indices, looking for funds trading at unreasonably cheap prices, and those which seem to be susceptible to activism, providing opportunities to agitate for better value or higher exits than other shareholders. Clarke said the segregated accounts afforded daily visibility into the managers’ portfolios, enabling QIC to better monitor risk, and that the manager would receive monthly reports from each manager. He said that while many institutional investors were opting for global equities mandates that included both developed and emerging markets, these managers might not often provide the “depth” of analysis that specialist emerging markets managers could. “They will look at large-caps but they won’t look at country and regional plays.” QIC spent more than three years developing the product and has reserved capacity with the underlying managers, said Fiona Mann, product specialist with the international implemented equities team.