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What’s New In Investments, Funds? – BlackRock, Preqin

Editorial Staff 3 June 2024

What’s New In Investments, Funds? – BlackRock, Preqin

The latest news in investment offerings, financial products and other services relative to wealth advisors and their clients.

Investment titan BlackRock has launched the BlackRock Global Smaller Companies Fund.

The fund, which is available to UK investors, seeks to capitalise on the high-alpha potential within the smaller companies’ universe, an area of the market that has historically outperformed larger companies over the long term, the firm said in a statement.

Global small caps are currently trading at a 26 per cent discount to large caps (greater still in the UK market) – around all-time highs. This compares with the sector’s typical premium of circa 10 per cent.

The fund is co-managed by Matt Betts and Dan Whitestone within BlackRock’s emerging companies team, collectively backed by over 50 years’ cumulative experience researching smaller companies. The team has a long track record of investing across the market cap spectrum both in the UK and internationally.

“As active managers, we believe small-cap stocks can present us with the most attractive hunting ground as these companies tend to operate in an inefficient, under-researched area of the market and can offer the potential to generate returns for our clients over the long term,” Whitestone said.

“Alongside the attractive valuation opportunity right now, we believe that small-cap funds can provide excellent long-term investment due to their historic outperformance compared to large caps. Within this large universe, the companies we seek to invest in are characterised by having strong management teams, defensible market positions, differentiated or competitive product offerings, and are underpinned by structural growth drivers,” Betts added.

The MSCI World Small Cap index will act as the representative of the investment universe of the fund and should be used by unit holders to compare the performance of the fund.

Preqin, a specialist in alternative assets data, tools, and insights, has launched Term Intelligence, which offers a large searchable database of Limited Partner Agreement (LPA) terms globally and enables enhanced private fund negotiations.

By accessing this database, alternative fund managers, investors, and their legal advisors can benefit from greater clarity when reviewing and benchmarking LPA terms. Ultimately, Term Intelligence makes it possible to see whether the terms are competitive within the market, and whether these terms, as well as the fees and expenses, are aligned with market standards to support LPA negotiations, the firm said in a statement.  

Preqin introduced Term Intelligence to help mitigate the complications industry professionals face when drafting and negotiating LPA terms. Investment professionals on both sides of the table find the process of investing in a fund, including the legal due diligence and negotiations, too complex and time-consuming, the firm continued.

With Term Intelligence, Preqin said investors can conduct thorough pre-investment due diligence on fund terms with the assurance that they can understand the "objective baseline" of what constitutes a market rate. Meanwhile, fund managers are able to check LPA terms against a cross-section of funds, helping them draft competitive data-backed fund terms to secure capital for fundraising. Finally, law firms can provide data-driven guidance to their investor or fund manager clients to expedite LPA negotiations, the firm added.  

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