RM Funds has announced the launch of the VT RM Alternative Income Fund (RMAI), an actively managed open-ended fund investing in defensive, income producing alternative assets.
Pietro Nicholls (pictured), Principal – Investment Manager of RM Funds, explains that the firm was launched in 2010 and spent the first half of its life as RM Capital Markets, an agency trading business in corporate credit.
A subsequent seeding two and a half years ago of USD50 million by an institutional investor pushed the company on its evolution into RM Funds which now has USD150 million under management for largely institutional investors, such as the Church of England and AXA.
“We are focused on the alternative space, which we define as anything not traditional equity or fixed income,” Nicholls says.
The UCITS V fund, which targets 5 per cent annual income distribution and a 7 to 8 per cent total return, offers investors a single route to a diversified, highly selected and defensive portfolio of alternative, predominantly listed, income producing assets across specialist real estate, alternative lending and infrastructure.
The fund will have charges capped at 0.85 per cent.
The income producing angle of this fund does make it particularly appealing to retail investors starved of income producing investments, but Nicholls feels it has something to offer the institutions as well.
“It also attracts itself to smaller institutions that don’t have the capability to make lots of allocations to the alternative space,” he says.
The fund will focus on the lower risk end of the alternatives space, as RM as a firm is negative on the financial world at the moment. “We are looking more defensive,” Nicholls says. “We are trying to offer a shelter against volatility and the key thing is whether the risk/reward is balanced enough.
“From our perspective, it’s hard to sell a fund in the current environment. We are all doom and gloom as the world is not looking rosy with the US with its conflicting physical and monetary policies; Spain with its loss of a prime minister; Italy very volatile and Brexit issues in the UK.
“Factor everything together and it spells a difficult time in the market and if investors don’t have a choice at least they will have a choice in terms of allocating to alternatives.”