Morgan Stanley adds FX macro-heavyweight Stephen Jen to Ucits platform
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Foreign Exchange

Morgan Stanley adds FX macro-heavyweight Stephen Jen to Ucits platform

Morgan Stanley has added a new fund by prominent FX macro-strategist Stephen Jen to its family of Ucits III funds, which provide investors with regulated exposure to the global market for transferable securities.

The inclusion of Jen’s new macro forex fund in the Morgan Stanley investment platform sees the prominent currencies strategist team up with the bank he joined in 1996. At Morgan Stanley, he worked as head of global currency research during the global financial crisis, leaving in 2009 to join commodities hedge fund BlueGold.

In October 2011, Taiwan-born Jen partnered with former Morgan Stanley currency economist Fatih Yilmaz to launch SLJ Macro Partners, a multi-million dollar hedge fund focused on currencies trades positioned across a variety of assets, including commodities, equities and fixed income, to cut portfolio volatility.

Jen is well-known for his iconoclastic macroeconomic views, and is widely viewed as a USD bull and a eurozone bear, theorizing that the dollar should be sold only when global risk aversion is low and the outlook on the US economy is lacklustre.

In an interview with EuromoneyFXNews, Jen says he remains a “glass-is-half-empty” investor, recognizing that quantitative easing efforts in the EU and US have had powerful effects on investor psychology but seeing signs of weakness within the tentative signs of macro-stabilization.

“I have difficulties coming up with reasons to think we will see a healthy recovery in 2013,” says Jen. “The fiscal cliff in the US is real. Earnings are down; they matter. The markets may be a bit confused right now, being torn between the weak [macro] economy and aggressive central banks.”

‘A very special positioning’

Morgan Stanley global head of fund-linked business David Armstrong – whose division includes the bank’s UCITS umbrella company, the Ireland-based FundLogic Alternatives – says the addition of Jen’s new fund to the FundLogic UCITS platform means investors will have access to the views of a “very unique” manager.

“Stephen's strategy has a very special positioning within our platform,” says Armstrong. “What he brings to the platform is a very strong academic background, a research-based approach and a fundamental knowledge of macroeconomics globally.”

SLJ's macro forex fund is the first macro fund to join the Morgan Stanley UCITS platform and has already secured more than €20m at launch from several investors, says Armstrong.

Overall, the Fund Logic Alternatives UCITS facility now includes eight long/short equities funds - one US-focused, one Asia-focused, one Brazil-focused and others cyclically-focused with money distributed between financials (global and US), real estate, technology and healthcare, says Armstrong.

In addition, the platform has one long only, one event driven and one convertible bond arbitrage fund, says Armstrong.

Morgan Stanley is next hoping to add some CTA-centric funds to the FundLogic platform as well as another long/short equities manager focused on the US market, says Armstrong.

In October 2011, Morgan Stanley launched FX Gateway, a multi-manager platform aimed at providing institutional investors access to select currency managers, putting the bank head-to-head with other banks, including Deutsche Bank and Citi, in offering clients exposure to currency funds.

Armstrong says that, while there are similarities between funds included in the Morgan Stanley/FundLogic Alternatives Ucits III platform and those included in the FX Gateway facility, the regulated nature of Ucits funds means they cannot legally be part of a the FX Gateway offering.

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