Mercer Global Investments has seeded investment manager BlackRock's latest fund to the tune of $60 million.
The BlackRock Global Enhanced Emerging Markets Fund was launched last week and aims to beat the MSCI Emerging Markets index by between 75 and 100 basis points.
"It's basically a quantitative beta play," BlackRock head of distribution Damien Frawley said. "It's quite a challenge for qualitative managers to add value in the global emerging markets. It's a market that will shoot the lights out one year and perform badly the next."
The fund's investments will be managed by BlackRock's Quantitative Investors team based in Princeton.
BlackRock Quantitative Investments' managing director Richard Vella said the emerging markets fund needed to turn off some of the signals used in broader global quantitative enhanced portfolios.
"Earnings quality . . . we found didn't prove to be a worthwhile signal in most of the emerging markets. However, most of our other quantitative investment management methods work well," he said.
"By using derivative instruments we have been able to get the exposure we wanted without incurring high transaction costs and enabling us to avoid some trading constraints usually associated with one or two of the emerging markets."
Frawley added that BlackRock was in talks with a number of other potential institutional investors in the fund, with a decision pending in the next two weeks.
