Mirabaud fund appeals to investors 'afraid of the bond turn'

Chess boardMirabaud Asset Management has launched a fund designed to allocate dynamically among fixed income sectors and so protect investors from the effects of higher interest rates.

The Mirabaud Global Strategic Bond Fund was launched this month with assets of $100 million (€73 million). It is managed by Andrew Lake, head of high yield and fixed income specialist, and by Fatima Luis, senior portfolio manager.

“This strategic bond fund is a crucial solution for our investors who are all afraid of the bond turn and the consequences on their portfolio of an interest rate normalisation process,” says Lionel Aeschlimann, managing partner and head of asset management at Mirabaud.

“A more dynamic approach by an experienced team mixing instruments and searching for value is the only way to address these uncertain times.”

Although the US Federal Reserve has calmed markets by seeming to delay plans to taper bond purchases, the Fed has not necessarily delayed plans to raise its benchmark policy rate, say analysts.

Michala Marcussen, global head of economics at Societe Generale, recently suggested the federal funds rate could rise from zero to 6% by 2017.

Interest rates in the bond market have already increased. Yields on ten-year US treasuries hit 3% in early September as speculation about tapering reached fever pitch. Reassuring words from the Fed have since brought yields down to 2.5%, but this is still well above the level of 2% seen at the start of the year.

The European Central Bank said at the start of October it would keep its benchmark interest rate at 0.5% and Mario Draghi says they will stay at their current level or lower “for an extended period”.

The Bank of England this week hinted it would raise interest rates earlier than expected due to improved growth forecasts. However, analysts had not expected the rise until late 2016.

©2013 funds europe