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Niche Asset Management launches its UK Electric Mobility strategy


Fund manager Niche Asset Management has launched a GBP class of its existing Luxembourg fund, Pharus Electric Mobility Value Fund. This is being made available immediately to IFAs and wealth managers in the UK. Pharus EMV is focused on companies that will benefit from the electric mobility revolution while the market is failing to realize it.

For example, having sold lithium stocks when they started to look frothy, the fund maintains exposure to lithium through stocks that the market does not yet reckon as lithium players. If the lithium price starts to weaken from the actual high level, these companies won’t be affected. If the lithium market stays where it is or increases further in price, those players at a certain point should play catch up, offering a significant upside.

“We expect that the penetration of electric vehicles within the global economy in the next two to three years will be much higher than forecast if there were just more vehicles available,” said Massimo Baggiani, co-portfolio manager for the fund. “In fact, we anticipate significant bottlenecks in lithium cells manufacturing and all along the supply chain, from basic materials to precursors, anodes, cathodes, etc. This will lead to price increases, fat margins and a significant rerating of the less well-known players that now trade very cheaply. Later, capacity and competition will follow, and the sector will normalise. By then we expect to have already closed the fund. We are value investors, once we cannot spot value opportunities in this niche, we will return the money to investors. Today we see upside potential close to 100% for our portfolio before this could happen.”

Small but focused strategy

Thanks to the limited size of the portfolio (about EUR 19m) the fund can invest in super-value small players in Japan and Korea without incurring liquidity risks. To be able to stick to this approach the fund managers set a maximum size for the fund of EUR 50m. Once it reaches that AUM it will be possible to exit daily but not to invest further. This allows the fund managers to liquidate 90% of the portfolio in one day and 99% in one week, which is much better than most UCITS funds.

Niche has been researching this sector since the end of 2012 and launched the first electric mobility fund in 2015 when the main brokerage houses and industry experts were dismissing electric mobility as a fad. The fund delivered a significant performance and gained awards in Italy where it was initially distributed.

Robust performance with less risk

The new fund has delivered robust performance while taking much less risks of its thematic peers or in general technology funds. Being on the sector for so long the team has established relations with companies, experts and analysts. The company interacts and engages with all the investee companies for business and sustainability purposes. To do this the fund relies on two Japanese and one Korean native speaker internal analysts. The fund is categorized as Article 9 SFDR.

Niche Asset Management is a boutique fund manager, based in London, which develops investment strategies around unique and distinctive value niches, neglected by the market and larger fund managers and where it is difficult if not impossible to find and/or create specific exposure.

The fund has a limited turnover, does not do daily trading nor buys derivatives. The biweekly reporting is very accurate and reports on all the trades made and the portfolio. Clients can have access to the research for each company as well as to the portfolio managers and analysts.

The newly launched UK class charges 0.25% in management fees and 10% in performance fees, absolute, with a high water mark (without reset).

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This article does not constitute investment advice. Make sure you do your own research or consult a professional advisor.

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