Investments 

River and Mercantile to launch absolute return funds

River and Mercantile to launch absolute return funds

River and Mercantile is to launch a pair of absolute return funds as part of its growth strategy, the company has revealed.

In its half-year market update this morning (March 11), covering the period to the end of December 2018, the company stated it is launching a Global Macro fund, which is being seeded with £5m of River and Mercantile’s own money, and an Emerging Markets Absolute Return fund.

The company’s update stated both funds are to be launched in the near future and come in response to client demand.

This comes as most recent data from the Investment Association (IA) showed the sector was the worst selling IA sector in February with £665m being withdrawn from the funds during the month.

The statement read: "We see strong demand for this product emanating from our client base in the markets in which we operate and we will look to seed it before the end of the financial year.

"The features of these macro strategies are that they have very significant capacity and are very scalable to deliver margin expansion faster than some of our existing capabilities.

"They can therefore be very significant contributors to group profitability if successful and we consider them to be strategically important to the group."

The company reported a profit of £8.4m for the six months to December, compared with £9.6m for the same period in 2017.

Among the factors blamed by the company for the fall in profits was the cost of complying with Mifid rules.

Assets under management at the firm were £34.2bn at the end of December, an increase of one per cent on the previous six months, and five per cent on the same period in 2017.

david.thorpe@ft.com