Kames Capital launches replacements for Absolute Return Bond fund

Business launchInvestment manager Kames Capital has launched two funds as an alternative to the Kames Absolute Return Bond fund, which is no longer being sold to investors.

The firm decided to stop actively marketing the Kames Absolute Return Bond fund in February this year, after its strong performance in 32 of 43 months drew in assets of almost £2 billion (€2.8 billion). Stephen Jones, Kames chief investment officer, says that above this figure the structure of the fund would pose potential capacity constraints.

The two funds launched this month will provide investors with a similar strategy to the previous fund, with both aiming to generate low-risk positive returns over a three-year period, regardless of market conditions.

The Kames Absolute Return Bond Global fund aims to outperform the three-month GBP Libor index by 2.5% a year net of fees, whilst the Kames Absolute Return Bond Constrained fund aims to outperform the one-month Euribor by 1% a year net of fees.

Jones says: “We are seeing a lot of demand for this type of fund from retail and institutional clients. Pension plans for example are using absolute return bond funds in various ways, particularly as the Libor generator alongside their LDI [liability-driven investment] strategies.”

The global and constrained funds are domiciled in Ireland and available in sterling, euro, Swiss franc and US dollar share classes, with sterling as the base currency for the global fund and euros for the constrained fund.

The global fund will be co-managed by John McNeill, Sandra Holdsworth, Nicholas Chatters and Paul Dilworth, while the constrained fund will be co-managed by Euan McNeil and James Lynch, supported by Paul Dilworth.

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