Another cooperation agreement between an Israeli company and a foreign investment house was announced yesterday. Bank Hapoalim (LSE: BKHD; TASE: POLI) investment fund manager Lahak - Mutual Funds Management Ltd. will cooperate with US investment house Wellington Management Company, which manages $542 billion in assets on behalf of 1,000 institutional investors.
The two companies will jointly launch a fund, which will focus on the biotechnology and healthcare industries. This will be the first in a series of collaborations between Lahak and Wellington, to which Lahak plans to transfer the management of additional funds. Lahak said it would choose the type of fund to jointly launch with Wellington, in accordance with the latter’s delivery of proven results over time. The new fund will be called Lahak Healthcare, and it will invest in stocks in various healthcare companies, specializing in drug development and marketing, biotechnology, health insurance and other similar fields. Lahak Healthcare will charge a 3% management fee.
Lahak CEO Eldad Malkin said, “Healthcare is a very attractive area for investment. Life expectancy rates in the western world are rising, thereby increasing the number of elderly people that need various kinds of health services. This higher demand has triggered the development of new solutions by the pharmaceutical and biotechnology industries.”
Lahak is the only large bank fund not have to been sold. The massive redemptions recorded by various bank funds in recent months have highlighted the possible downside of any acquisition of a mutual fund management company. Consequently, the demand for Lahak has been lower, in contrast to the stampede for other bank funds.
Lahak itself has also suffered from redemptions in recent months, largely as a result of its fund mix, which is based primarily on shekel-denominated funds. Shekel denominated investment channels across the market have suffered from redemptions because of their low yield levels, compared with those produced by other instruments. This led Lahak to diversify its fund mix by adding attractive funds such as the one announced yesterday, to stem the decrease in assets.
The wave of sales of fund assets to non-bank companies has intensified competition in the trust fund market. Many institutions have launched new funds and launched aggressive marketing campaigns to promote them. Lahak appeared to be have been left behind, but now it too has joined the competition.
Published by Globes [online], Israel business news - www.globes.co.il - on May 29, 2006
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