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MiFID II pressures cause AA-rated trio to shut EMD fund

MiFID II pressures cause AA-rated trio to shut EMD fund

The emerging Europe fund overseen by Avaron Asset Management’s Citywire AA-rated trio was closed on 30 January due to changes imposed by MiFID II, Citywire Selector has learned.

A notice to shareholders announced the planned closure of the Avaron Eastern Europe Fixed Income fund, which is an Estonia-domiciled Ucits fund.

In the note, Avaron Asset Management said it liquidated the fund formally on 31 January after receiving permission from the Financial Supervision Authority.

A source close to matter told Citywire Selector that the fund was due to constraints placed on the six-year-old strategy by the introduction of MiFID II at the start of 2018.

The fund had been co-run by the Citywire AA-rated trio of Kristel Kivinurm, Valdur Jaht and Peter Priisalm. They continue to co-manage the Avaron Emerging Europe fund, which is an equity approach.

The Avaron Eastern Europe Fixed Income fund had €8 million in assets in the latest available data prior to the fund's closure.

Their bond fund had been one of the most consistent outperformers in the emerging markets other section of the fixed income universe. It sits third out of 21 peers on a five-year basis, having returned 25.4% against the average fund return of 5.8% over the same period to the end of December 2017.

This is while the fund ranks fifth out of 37 on a one-year basis, having returned 18% versus a 9.3% average peer return.

*The managers were AA-rated at the time of the announcement. They were downgraded to A-rated in the most recent Fund Manager Ratings update for January.

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