\n In an interview with Hubbis, Bobby Owen, Head of Business Development for the asset management business at Causeway Securities, and William Morris, Business Development Manager for Asia, explained how the firm is bringing its defined outcome expertise to a wider audience through two UCITS funds.
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\nCauseway Securities has built its business on structured products and defined outcome investing since it was founded in 2016. Its asset management division now packages the same core principles into daily-dealing mutual funds, with the underlying assets held in sovereign bonds.
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\nThe message was that in a market where many investors are concerned about volatility and the long-term prospects for developed equity markets, there is a strong case for strategies designed to deliver positive returns whether markets rise, move sideways, or fall modestly, with significant downside protection.
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\nWith new licenses in Dubai and Hong Kong, combined with a growing presence across the Middle East and Asia, the team is now focused on building awareness of the funds with advisers, wealth managers, and family offices in these regions.\n <\/p>\n
Key Takeaways<\/p>\n
\n\tDefined Outcomes in a Fund Wrapper: Causeway Securities\u2019 two UCITS funds apply the principles of its structured products business in a daily-dealing, unitised format.
\n\tSovereign Bonds at the Core: The funds currently hold UK Gilts or US Treasuries, with the coupon exchanged for autocall exposure, addressing the counterparty and liquidity concerns often associated with structured products.
\n\tTwo Funds for Different Risk Appetites: A cautious strategy targets 7% to 8% a year with low volatility, while a more dynamic strategy targets 9% to 10% across a broader range of global indices.
\n\tA Different Kind of Diversification: Defined outcome strategies offer a risk and return profile that cannot be replicated simply by adding other asset classes, sectors, or geographies.
\n\tBuilding Scale in Asia: New licenses, platform partnerships, and the launch of ETFs in November underpin the firm’s ambitions to grow its asset management business internationally.
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What If The Outcome Could Be Defined From The Start?<\/p>\n
Causeway Securities was founded in 2016 to manufacture and distribute defined outcome investment solutions and liquid alternatives. These are strategies that would traditionally be known as structured products, offering a contingent return linked to an underlying index such as the S&P 500.<\/p>\n
Owen was clear that defined outcome does not mean fixed income. The concept is about having a predefined return profile, rather than a fixed coupon, and it is on that principle that the firm has built its entire business, serving both institutional and retail clients.<\/p>\n
The company began in the UK but has expanded rapidly. It now has operations and offices in the UK, Ireland, mainland Europe, the Middle East and South Africa, and secured a license to distribute in the US a couple of years ago. Most recently, it obtained its Hong Kong license and opened an office there.<\/p>\n
That growth has come both organically, through new hires and in some cases the arrival of complete teams, and through acquisition.<\/p>\n
From Structured Notes To Unitised Funds<\/p>\n
One of Causeway Securities\u2019 first acquisitions was a boutique investment management company, which became the catalyst for creating a dedicated asset management division. The division now runs two UCITS-regulated mutual funds, both domiciled in Dublin.<\/p>\n
Owen explained that the asset management business is effectively a unitised fund solution built on the same core principles as the firm’s structured products. The aim is to leverage Causeway Securities\u2019 existing capabilities, client base, and relationships to distribute a new kind of proposition.<\/p>\n
Two Funds, Two Temperaments<\/p>\n
The two funds share the same fundamental mechanics, but have different objectives.<\/p>\n
The first, Levendi Thornbridge Defined Return Fund, which is being rebranded as the Causeway Defined Returns Fund, is the more cautious of the two. It targets a return of 7% to 8% a year, with low volatility and a strong focus on capital preservation. Owen said it is designed for cautious clients, such as those approaching retirement or in the early stages of drawdown.<\/p>\n
The second, the Causeway Dynamic Growth Fund, targets 9% to 10% a year. It draws on a broader range of underlying indices, including the S&P 500, Euro Stoxx, FTSE 100, Nikkei, Hang Seng and Russell 2000, with around 20% exposure to emerging markets. It carries slightly higher volatility, in return for a higher target return.<\/p>\n
Owen described both funds as aiming to deliver returns close to those of equity markets, but with lower volatility. Morris noted that the broader index exposure of the Dynamic Growth Fund has proved particularly popular with international clients in Southeast Asia, the Middle East and South Africa.<\/p>\n
Sovereign Bonds At The Core<\/p>\n
Owen was keen to correct a common misconception. While the funds are sometimes described as a basket of structured products, he said that description can create the wrong impression.<\/p>\n
The underlying assets are sovereign bonds. The Defined Returns Fund holds UK Gilts, while the Dynamic Growth Fund is currently backed by US Treasuries, though it can hold any G7 government bonds. The fixed coupon from those bonds is exchanged for autocall exposure, and it is that autocall which drives the return profile.<\/p>\n
From his years in structured products, Owen said the two most common objections were counterparty risk and liquidity. The fund structure is designed to address both. There is no corporate credit exposure to an issuing bank, with the underlying credit exposure instead to UK Gilts or US Treasuries.<\/p>\n
As UCITS funds, both offer a daily NAV and daily liquidity. Owen added that, unlike some real estate or private credit funds offering daily dealing, the underlying assets themselves are highly liquid, which he described as a real benefit for clients.<\/p>\n
Why Are Investors Rethinking Their Defences?<\/p>\n
Owen said there has always been steady demand for defined outcome strategies, because they offer benefits that long-only equity or bond investments cannot. In particular, they aim to deliver a positive real return above cash and inflation, largely regardless of market direction.<\/p>\n
Recently, however, that appetite has grown. Investors are increasingly concerned about long-term growth prospects in developed equity markets, about rising volatility and about the possibility of a correction.<\/p>\n
In that environment, a strategy designed to deliver returns in rising, flat or falling markets, combined with significant downside protection, has become more attractive to clients.<\/p>\n
Morris added for the Dynamic Fund, for example, we target around 10% per annum over the medium to long term. We construct and actively manage a portfolio of positions designed to contribute towards that objective without requiring equity markets to rise strongly each year. Depending on their terms, positions can generate positive returns in rising, sideways, or moderately falling markets. Government bond income contributes towards the return objective, while the equity-linked positions provide additional return potential with conditional downside protection.<\/p>\n
A Different Kind Of Diversification<\/p>\n
Owen also highlighted the role these strategies can play in a wider portfolio. Because their risk and return profile is fundamentally different, he said, they provide a level of diversification that cannot be achieved simply by adding other asset classes, sectors, geographies or market capitalisations.<\/p>\n
The ability to offer that in a unitised fund has also made the concept far more accessible. Strategies that were once largely the preserve of structured product specialists are now available through more mainstream channels.<\/p>\n
From Advisers To Institutions<\/p>\n
Causeway Securities growth has also changed the type of client it works with. With around USD5 billion in assets across the business, the firm has grown in size, stature and recognition well beyond its home market.<\/p>\n
Historically, Owen said, the business was largely adviser-focused, serving what would be considered the retail market in the UK. Its scale and expanding capabilities now allow it to work increasingly with larger institutional accounts, a trend he sees continuing across the company.<\/p>\n
Laying The Foundations In Asia<\/p>\n
Morris acknowledged that Causeway Securities\u2019 asset management proposition is still relatively new to Asia, and that the firm needs to build the same level of recognition it enjoys in the UK.<\/p>\n
Much of the past year has been spent putting the building blocks in place. Causeway Securities has been onboarded with Allfunds, giving access to platforms across multiple jurisdictions, and has secured its SFC license in Hong Kong. In Singapore, it is regulated by MAS to serve accredited investors.<\/p>\n
“I feel like we’re going in the right direction of getting a name out there” Morris said.<\/p>\n
Can Access Be Turned Into Assets?<\/p>\n
With accessibility now in place, Owen said the priority for the next 12 months is to build brand awareness and convert that access into assets. Both strategies have long-standing track records, which he believes gives advisers and wealth managers confidence in the approach.<\/p>\n
The asset management business currently manages around USD200 million, much of it from UK investors who came with the acquired fund. The ambition is to grow that to USD500 million, then USD1 billion, and to replicate some of the success the firm’s structured notes business has achieved over the years.<\/p>\n
That makes international markets central to the plan. Owen said the focus is now on targeting markets where the asset management business has had little presence to date, with Asia a key part of that.<\/p>\n
What Comes After Notes And Funds?<\/p>\n
Owen described the experience of being part of Causeway Securities growth as genuinely exciting, with the story unfolding in real time. Expanding the overall proposition will be central to its next phase.<\/p>\n
He described the asset management business as an effectively uncapped division with significant growth potential. Causeway Securities is also preparing to launch a range of ETFs in November, applying its core capabilities in a different format to reach a different part of the market.<\/p>\n
That will give the firm three ways to access its expertise: structured notes, UCITS funds and ETFs. Owen added that the company remains highly ambitious, and could expand into further markets over time.<\/p>\n
Morris rounded off by outlining the clients the team is keen to work with in the region. These include financial advisers across a broad range of practice sizes seeking alternative investment strategies for their clients, along with asset managers, fund-of-funds managers, and single-family and multi-family offices with focus on capital preservation and risk-conscious portfolio construction.<\/p>\n
The big emphasis is on shared investment objectives and long-term relationships, rather than the size of an adviser’s book. The aim is to give another option beyond conventional investment strategies, where that alternative is appropriate for their clients’ objectives and appetite for risk.<\/p>\n
The People Behind The Proposition<\/p>\n
Owen has more than 20 years of experience in financial services. He began his career in asset management, before spending the past 15 years specialising in structured products and defined outcome investments. He joined Causeway Securities two years ago and leads business development for its asset management business. After 15 years living and working in London, he is now based in his native West Wales, travelling widely for the firm.<\/p>\n
Morris joined Causeway Securities at the start of this year as the Business Development Manager for Asia. Based in Hong Kong for the past five years, he covers markets across Asia, expanding the firm’s regional presence and building long-term relationships with financial intermediaries.<\/p>\n","protected":false},"excerpt":{"rendered":"In an interview with Hubbis, Bobby Owen, Head of Business Development for the asset management business at Causeway…\n","protected":false},"author":2,"featured_media":680143,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[14],"tags":[72,176,61,60,174,175],"class_list":["post-680142","post","type-post","status-publish","format-standard","has-post-thumbnail","category-personal-finance","tag-business","tag-finance","tag-ie","tag-ireland","tag-personal-finance","tag-personalfinance"],"_links":{"self":[{"href":"https:\/\/www.newsbeep.com\/ie\/wp-json\/wp\/v2\/posts\/680142","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.newsbeep.com\/ie\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.newsbeep.com\/ie\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/ie\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/ie\/wp-json\/wp\/v2\/comments?post=680142"}],"version-history":[{"count":0,"href":"https:\/\/www.newsbeep.com\/ie\/wp-json\/wp\/v2\/posts\/680142\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/ie\/wp-json\/wp\/v2\/media\/680143"}],"wp:attachment":[{"href":"https:\/\/www.newsbeep.com\/ie\/wp-json\/wp\/v2\/media?parent=680142"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.newsbeep.com\/ie\/wp-json\/wp\/v2\/categories?post=680142"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.newsbeep.com\/ie\/wp-json\/wp\/v2\/tags?post=680142"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}