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Columbia Threadneedle fund favours maturity over duration

fund maturityColumbia Threadneedle’s latest high yield bond fund will focus on maturity rather than duration, the firm said.

The Threadneedle (Lux) European Short-Term High Yield Bond Fund will be co-managed by Roman Gaiser, the company’s regional head of high yield portfolio management, and Gareth Simmon.

According to Gaiser, the fund focuses on a bond’s maturity rather than duration when managing risk because “this removes the unpredictability of duration extension risk, giving this fund lower interest rate sensitivity than a standard high yield bond fund”.

The follows the investment approach of the firm’s European High Yield Bond Fund and by investing mainly in short maturity European high yield credit, the fund aims to deliver income with some capital appreciation. It is agnostic to a market index, Columbia Threadneedle said.

In recent months there have been numerous bond fund launches focusing on duration as a way to manage the risk from interest rate hikes. The most recent launches were from Muzinich & Co and NN Investment Partners.

Last year JP Morgan Asset Management launched short duration funds in an exchange-traded fund format.

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