AllianceBernstein is working to launch its first feeder fund range in Latin America in a bid to expand its reach in the region.
The $535 billion asset manager plans to intially launch feeder-funds in Brazil due to demand from institutional investors and to leverage CVM 555, a law change that made investing abroad easier by lowering ticket minimums.
AB would expand to other countries based on demand, said Miguel Rozensztroch, the firm’s head of Latin and Central America and non-resident client group.
‘We’re considering a series of opportunities in this structure given [investors’] increased interest in diversifying and investing in a global way through local vehicles,’ Rozensztroch told Citywire Americas.
He added: ‘The evolution of tax regulation in some countries leads to the use of these vehicles to diversify and invest globally.’
AB is exploring equity and fixed income feeder funds, Rozensztroch said. The firm ran a total of $132 billion in equities and $243 billion in debt strategies as of September 30, according to its third-quarter results.
As part of its growth plan, AB is also seeking sub-advisory agreements in the US, Canada, Mexico, Chile, Brazil and Colombia, mainly with local asset managers.
‘We’ve constantly generated alpha for clients in different asset classes and we think we can give added value to clients under this scheme,’ Rozensztroch said.
‘It’s a scheme where we give the investment decisions, based on our successful strategies, and the client operates the fund through the local international market.’
AB already has sub-advisory agreements with Brazilian firms for US equities strategies, Rozensztroch said, though he couldn’t reveal the firms it has linked up with.
The funds operate through the Brazilian Depositary Receipts (BDRs) market, which gives local investors access to foreign securities traded in Brazil.
The firm has made strides in Latin America recently, including winning a $250 million slice of a $700 million US equities mandate from Mexico’s largest pension fund, Afore XXI Banorte. Citywire A-rated manager Frank Caruso and his team were tasked with running the strategy.
Now, the firm is looking to offer its customized asset allocation and portfolios strategies to the country’s pension funds, Rozensztroch said.
Turning to Chile, AB hired former MFS Investment Management’s Andes director Ignacio Fuenzalida in July to lead a new distribution office in Santiago.
For the past three years, AB has been distributing its funds in Costa Rica as the country’s pension funds have begun to invest abroad, said AB regional manager Oscar Zarazua.