High-end returns immediately draw suspicion especially given the rise of financial market volatility. However, the high-yielding Old Mutual US Dollar Money Market Fund aims to capitalise on the combination of low risk and rich clients to differentiate itself on the market.
Incorporated in Mauritius in April 2015 as a result of the collaboration of the African Treasuries segment of Nedbank Investment and Commercial division with the investment management arm of Old Mutual Investment Group Namibia, the Old Mutual US Dollar Money Market Fund is an investment vehicle for excess dollar liquidity. It offers a yield superior to those obtainable in current accounts or call deposits without increasing risk and maintaining liquidity. The investment management capability is being undertaken by OMIGNAM asset management of Namibia with Nedbank African Treasuries providing an investment banking advisory service designed to assist in maximising the yield.
The Old Mutual US Dollar Money Market Fund is on a rapid expansion curve, having grown from the initial $10 million seed capital invested by its founders, and has attracted in excess of $70 million in inflows. During a meeting with Business Magazine, the director of the board Vaughan Heberden stated that the fund aims to cross the $100 million mark within the next two to three months by tapping into the potential of the Mauritian market’s rich clientele.
The idea behind the setting up of the fund, explained Vaughan Heberden, is to not just have an alternative financial product but to develop over time a suite of financial products that are Mauritius-based. Over time, the objective is to set up an asset management team in place on the island once the funds have attained a critical mass.
Minimum investment: $100,000
With a minimum investment amount of $100,000, the fund targets a very distinct segment of investors. It positions itself as a specialist fund. This criterion is what in fact differentiates it in a large way from the questionable investments that shook the country’s financial sphere in 2015, where a lot of small investors saw their investments in jeopardy.
Kevin Whitfield, Head: African Treasuries, Carbon & Financial Products, Corporate and Investment Banking within Nedbank, pointed out that this alternative financial instrument offers no gearing, and no credit pickup. “It does not take on an additional risk parameter to enhance the return. All it does is diversify the risk while enhancing your portfolio. The fund has no equity or bond exposure – merely bank financial instruments and the risk factor is restricted to investment grade-A banks,” he stated.
Aside from international companies, the Old Mutual US Dollar Money Market Fund is now star-ting to generate interest among certain Mauritian investment companies and a few high net-worth individuals. Management has also been in talks with pension funds on the island. They will start to come in the mix soon, hopes Vaughan Heberden.
The focus is primarily on quality, not quantity and the director states that over time the fund targets around 30 to 50 investors. Every year, $600 billion to $800 million’s worth of capital flow through the Mauritian market, be it in private equity or in property, he points out. All these funds are temporarily held in bank accounts prior to being invested. Does he think the Old Mutual US Dollar Money Market Fund could get a large chunk of these flows? “No, but I would be really happy to see the fund cap around 5 per cent of these, which would be around $750 million to $1 billion,” he commented.
It is to be noted that the Old Mutual US Dollar Money Market Fund is not a closed fund and owing to its short-term liquidity aspect, investors can choose to disinvest within 48 hours.