Thursday 6th March, 2008

 

ANSA teams up with Schroders

 
 
 
 
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Rupert Robinson, left, head of private banking, London, for Schroders Private Bank, and Ray Sumairsingh, sector head, financial services, ANSA McAL Group.
Photo: JENNIFER WATSON

The fund’s target clientele is not mass retail but

high net worth

individuals and

pension funds.

“We’re looking

to target investors who want to

invest a minimum

of US$10,000

as opposed to US$1,000.

 

BY SANDRA CHOUTHI

[email protected]

If today’s global demand for 85 billion barrels of oil is considered high, Schroders Private Bank’s Rupert Robinson figures that’s guaranteed to treble in 25 years.

Imagine what that will do to the world price of oil, which peaked at US$104 and settled at US$102 on Tuesday.

“The next 25 years is going to treble the world oil demand from 85 billion barrels today to near 250 billion barrels,” said Robinson, head of private banking, London, for Schroders Private Bank.

Schroders International Select Energy Fund has been registered with the Securities and Exchange Commission (SEC).

The fund’s target clientele is not mass retail but high net worth individuals and pension funds.

“We’re looking to target investors who want to invest a minimum of US$10,000 as opposed to US$1,000.

“The prospectus actually allows investors with US$1,000 to invest, but the target market is more US$10,000 and up.

“Why we’re very excited about this fund is it has a very long track record,” Robinson said in an interview last week.

Schroders has partnered with ANSA Merchant Bank for the distribution of its investment products and services.

The fund has been registered and is available for purchase in T&T through the ANSA Merchant Bank, which will handle all the applications and the cash transfers to Schroders.

The relationship between the two started in 2003, with Schroders managing money for Tatil Life Assurance Ltd.

“This is really an extension of that relationship,” Robinson said. “What we want to do is to build our brand recognition in T&T.”

Ray Sumairsingh, sector head, financial services, in the ANSA McAL Group, said ANSA Merchant has targeted institutional-oriented investors with some individuals in-between.

He said even though the bank has approval from the SEC to conduct investments with US$1,000, that’s a retail market.

“We don’t really want to be in a retail market. We are carefully targeting those who have a genuine interest in investing for the outlook of this particular fund.”

The private bank, which recorded unaudited profit before tax to December 31, 2007, of £392.5 million, has been managing dedicated energy investments since the 1980s.

“We initially managed it for a specific Asian institution and then made that more widely available in Southeast Asia.

“Over the last 15 to 20 years, we have generated returns in excess of 150 per cent, which compares with the World Energy Index, which is up 250 per cent.

“Over the last five years, it has generated on average within the fund over 30 per cent per annum through investment, which is a fairly attractive level of return,” Robinson said.

Only ten years ago, the world oil price was US$30 a barrel.

“We think we are at the early stages of the investment cycle, where generally companies have under-invested for some considerable period of time.

“You have got huge demand, you have got too little supply and, therefore, you have got shortage of capacity.”

Robinson spoke of the demand pull from the aggressive industrialisation programmes of China and India.

Oil prices,

and geopolitics

Robinson said it’s certain that a level of speculation will always be associated with oil prices.

“I think that you are always going to get a geopolitical premium associated with oil.

“One of the themes we’re playing within our fund, in particular, is the whole issue of accessibility of oil today.

“If you look at where a lot of the oil reserves lie, whether it be in Russia, whether it be in Nigeria, whether it be in Venezuela, or in other countries where the geopolitical risk (exists).

“You’ve got Hugo Chavez nationalising all the oil reserves in Venezuela.”

It’s less about whether there is enough oil to meet demand and more about accessing the precious resource.

How the fund works

Robinson said investors will own units in the fund, which comprises no more than 30 global companies that Schroders has invested in.

“The fund is valued daily at net asset value reflecting the underlying holdings of that fund.

Features of the fund:

n It is priced on Bloomberg daily

n Investors will receive monthly fact sheets giving underlying performance and holdings of the fund

“There will be total transparency around what we own, what themes we are playing with in the fund, why it is performing well, why it is performing less well during periods.

“It is a high conviction portfolio of no more than 25 to 30 companies.

“The second thing is that it really de-emphasises the big integrated oil companies, the likes of Exxon Mobil, Chevron, Shell, BP. We don’t think that’s where the opportunity or the value lies.

“Our fund is going down the capitalisation scale, so we are looking at businesses with market caps of US$100 million upwards.”

Big on natural gas

“We are very big believers in the natural gas story, with advances in technology now rather than building the pipelines to turn it into liquid gas, you then transport it. What you are seeing is a global convergence of gas prices around the world.

“If you look at our fund and the historical performance relative to both the index and relative to the competition, we are consistently number one and by some considerable margins.”

Robinson said Schroders—which has a presence in 27 countries—has invested more than US$20 billion in energy companies worldwide on behalf of its clients.

As to the expectations of investing in Schroders International Select Energy Fund, Robinson said six, even 18 months, is too short a time to measure success.

“Business is built on relationships and building relationships is based on trust, respect, integrity, delivering results.

“If one is to give a measure of success, I think we need to be having this conversation, probably in three and five years’ time.”

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