Published: 2019-02-15 14:00:07 CET
Rietumu Asset Management
Company Announcement

Announcement of decision to reorganize several open-end funds and their subfunds

Dear clients and investors!

Joint-stock company “Rietumu Asset Management” investment management company (hereafter – the Company) has made a decision to reorganize several open-end funds and their subfunds that are under Company’s management upon the revision of the operational results of the funds and due to the current situation on the financial markets.

  • Fund Rietumu Asset Management Cash Reserve Fund with subfunds:
    • Rietumu Asset Management Cash Reserve Fund-EUR (ISIN: LV0000400869, ticker: RAMCREFR)
    • Rietumu Asset Management Cash Reserve Fund-USD (ISIN: LV0000400877, ticker: RAMCRUFR)

Both subfunds were created with the purpose of attracting investors who are interested in receiving a stable income and simultaneously retain relatively fast access to the invested funds.  The target assets of the subfunds were short- and mid-term debt securities, deposits of the credit institutions and other money market instruments with a low or moderate level of risk.

Since the launching of the fund in 2014, the interest of the investors in the short-term investments in US dollars (USD) and euro (EUR) currencies could be characterized as weak. This could be explained mainly by the state of the monetary policy imposed by the central banks in the USA and Eurozone countries. The policies implemented by the central banks in the USA and Eurozone countries led to historically low interest rates and bond yields in the US dollars and even negative rates and yields in euro. As the result, the envisaged operational targets (number of investors and size of assets under management) of the subfund Rietumu Asset Management Cash Reserve Fund-USD (ISIN: LV0000400877, ticker: RAMCRUFR) were not achieved. Taking into account the above mentioned facts and relatively high level of fixed costs attributable to manage the fund, it was concluded that subfund did not achieve the predefined business targets. At the same time, subfund Rietumu Asset Management Cash Reserve Fund-EUR (ISIN: LV0000400869, ticker: RAMCREFR) remained inactive as the actual operations were not started.

  • Subfund Rietumu Asset Management Fund-Global Equity USD (ISIN: LV0000400885, ticker: RAMGEUFR)

The subfund was created with the purpose to provide an opportunity for investors to achieve high growth in the value of invested assets over the long term by investing in a broadly diversified portfolio of global public equities. The investment horizon of a potential investor is long-term, more than five years, and the risk tolerance is high.

Since the launch of the subfund  Company concluded that the investors expressed significantly less interest in the investments in global equity market (without conceptual restrictions in respect to geographical allocation and industry sectors) compared to alternative equity products of the Company like thematic equity strategies (e.g. “Brands & Luxury”, “Industry 4.0” or “REITS”). On top of it, results of comparable analysis demonstrate that the thematic equity indices outperform global broad market indices. As the result, number of investors and size of assets under management of the subfund are significantly less, if compared to above mentioned alternative equity products. Taking into account the above mentioned facts and relatively high level of fixed costs to manage the fund, it was concluded that subfund did not achieve the predefined business targets.

 

Based on the above-mentioned facts, the Company made a decision to liquidate: 

  • Fund Rietumu Asset Management Cash Reserve Fund with subfunds:
    • Rietumu Asset Management Cash Reserve Fund-EUR (ISIN: LV0000400869, ticker: RAMCREFR)
    • Rietumu Asset Management Cash Reserve Fund-USD (ISIN: LV0000400877, ticker: RAMCRUFR)
  • Subfund Rietumu Asset Management Fund-Global Equity USD (ISIN: LV0000400885, ticker: RAMGEUFR)

After receiving the permission from the Financial and Capital Market Commission (protocol as of 29.01.2019) the Company made a decision to initiate the process of the liquidation of the open-end fund Rietumu Asset Management Cash Reserve Fund (including two subfunds) and subfund Rietumu Asset Management Fund-Global Equity USD starting from 25 February 2019. The process of liquidation is expected to be finalized by 31 May 2019.

Starting from 25 February 2019 15:00 (GMT +2) the Company stops repurchase of the fund units issued by Rietumu Asset Management Cash Reserve Fund-USD (ISIN: LV0000400877, ticker: RAMCRUFR) and Rietumu Asset Management Fund-Global Equity USD (ISIN: LV0000400885, ticker: RAMGEUFR). Claims of the investors will be settled in cash. In line with the Law on Investment Management Companies, cash settlements will be transferred to the investors at the end of the liquidation process proportionally to the number of fund units held.

The process of liquidation is managed by the JSC “Rietumu Asset Management” IMC. Investors can submit their applications at the office of the JSC “Rietumu Asset Management” IMC (office address: Riga, Vesetas Street 7, LV-1013).

In line with the requirements of Law on Investment Management Companies, the information on the liquidation process will be published in the official newspaper "Latvijas Vēstnesis" and on the website of local stock exchange Nasdaq Riga.

For all the inquiries investors may contact the Company by calling +371 670 252 84.

 

Best regards,

JSC "Rietumu Asset Management" IMC