KUALA LUMPUR (Nov 9): Affin Hwang Asset Management Bhd (Affin Hwang AM) has launched a new equity fund that invests in European stocks.

Dubbed Affin Hwang European Unconstrained Fund (EUF), the feeder fund seeks to achieve capital appreciation over medium- to long-term period by investing in UBS (Lux) Equity SICAV — European Opportunity Unconstrained, a Luxembourg-domiciled fund of UBS Asset Management.

The fund will invest a minimum of 80% of its net asset value (NAV) into the target fund and a maximum 20% of the NAV into money market instruments, fixed deposits and/or liquid assets.

The target fund is managed by the UBS Concentrated Alpha Team of UBS Asset Management (UK) Ltd, London.

"It is a flexible equity fund that invests in European stocks and its strategy allows the target fund manager to take up short positions alongside the fund's long positions, and this gives the target fund an extra source of returns whilst also providing downside protection," Affin Hwang AM chief marketing officer Chan Ai Mei said in a statement today.

Since the inception of the target fund's strategy in May 2007, it achieved five years' cumulative returns of 106.8%. Year to date, the target fund has outperformed its benchmark MSCI Europe by 9.8%.

Chan said there are five main reasons on positioning investments into the European market. Firstly, earnings growth will be the main driver to boost the European market as company earnings in Europe are expected to grow strongly.

Secondly, a relatively lower euro and, thirdly, the quantitative easing for Europe will keep demand for risk assets high as investors will look for more attractive asset classes as interest rates remain low in Europe.

"Fourthly, eurozone is one of the biggest net oil importers and will benefit from the lower oil prices. Lastly, valuations for European companies are not expensive and dividend yields are relatively attractive, which should provide for ample opportunities for investors in the European market," she added.

The fund is available in four currency classes: euro class, ringgit-hedged class, Singapore dollar-hedged class and Australian dollar-hedged class. The offer period of EUF is not more than 21 days, starting Nov 9 to 29.

EUF is available exclusively for Citibank's clients for the first three months of the launch of the fund. Thereafter, the fund will be available for investment through Affin Hwang AM and its partners.

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