We profile some of the most interesting fund launches in recent weeks and examine the performance of a product already on the market.
MULTI-ASSET
Janus Capital International has launched the Global Adaptive Multi-Asset fund, designed to defend against downside shocks in the current market.
The fund aims to provide investors with total returns through growth and preservation of capital and income with positions across equity, fixed income and commodity assets.
The fund can invest up to 100% of its assets in any of these classes depending on market conditions. It aims to deliver a targeted absolute return in excess of Libor over a full market cycle, a low correlation to other asset classes, and a focus on long-term compound returns over average or relative returns.
The management team will adjust the fund’s portfolio according to the probability of extreme market movements.
Chief investment strategist Myron Scholes, who won a Nobel Prize for economics in 1997, will also contribute to the overall investment strategy.
Scholes has developed a quantitative screening model to provide forward-looking assessments of expected tail events.
The fund is open to institutional investors in Austria, Belgium, France, Germany, Italy, the Netherlands, Spain, Sweden and the UK.
SUSTAINABLE EQUITIES
Kames Capital has added to its socially responsible investing range with the launch of a new fund, which will invest globally in sustainable equities.
The fund’s management team will leverage Kames’ existing corporate governance and global equities capabilities to identify potential investments.
The fund will apply a proprietary sustainability screen to exclude stocks and sectors contrary to the principles of sustainable investing and ensure portfolio holdings adhere to strict environmental, social and governance requirements.
Its benchmark is the MSCI All Country World Index Total Return index.
The fund will initially be launched in Dublin before being made available via passporting to investors in key European markets including Austria, Germany, Italy, Spain and the UK, subject to regulatory approval.
Kames currently manages ethical fund assets of €2.8 billion.
FIXED INCOME
AllianzGI is to convert its Total Return fund to a Strategic Bond Fund, following approval by the UK’s Financial Conduct Authority.
The change will enable the fund to enlarge its universe of investable securities beyond bonds issued by UK and European corporates, governments, supranational institutions and local regional agencies.
The firm say the move will result in lower correlation to riskier assets, such as high-yield bonds and ultimately equities. Moreover, Allianz GI stresses the change will not result in additional currency risk to investors, as at least 80% of the fund will be invested in sterling-denominated securities.
Manager Mike Riddell, a renowned bond vigilante, will remain manager of the amended fund, although its the Barclays Global Aggregate will serve as its new benchmark.
AllianzGI’s fixed income assets have increased by more than 50% over the past four years to €167 billion, which represents 37.8% of the firm’s total assets under management.
CATASTROPHE BONDS
Lombard Odier Investment Managers is to launch its first catastrophe (cat) bond fund.
The fund will invest in a portfolio of securitised cat bonds, providing collateralised reinsurance with exposure primarily to regions with a high concentration of insured wealth, such as the US, Western Europe and Japan.
It’s the first insurance-linked securities (ILS) strategy to be launched by the firm since appointing ex-Dynapartners and Falcon Private Bank ILS manager Gregor Gawron to head of ILS last August.
The fund will target a net return of Libor plus 2%-4%, with low correlation to more traditional asset classes.
Cat bonds were created in the mid-1990s in the aftermath of Hurricane Andrew and the Northridge earthquake.
If a catastrophe takes place during the term of the bond, then investors lose money; the absence of such an event drives its returns.
According to Bloomberg figures, the cat bond market has been growing at an average of 20% per year since its creation. At the end of 2015, the market stood at €23 billion in size.
The firm expects the market to continue growing, due to the increasing concentration of wealth in developed and emerging markets alike.
ONE YEAR ON
One year ago, Frankfurt-based Deka Investments, the asset management and capital markets arm of the German Savings Bank Finance Group, launched an unconstrained global bond fund.
The fund invests in both developed and emerging market bonds, alongside sovereign, high yield, corporate, mortgage and convertible bonds. It aims to provide medium to long-term capital growth.
Investment opportunities can have varying credit ratings, although the minumum level is set at a B- according to Standard & Poor’s ratings.
Its portfolio is typically comprised of around 80 holdings and follows both long and short strategies.
As the fund is unconstrained, its performance is not measured against a benchmark.
Since launch, it has grown from an initial size of €15 million to €55 million, although it has returned -0.5%.
Last year was a challenging one for bond markets, with volatility and low interest rates worldwide impacting returns.
Underestimating the strength of core bonds, such as bunds, contributed negatively to performance, although a bearish stance on financials and cautiously investing in emerging market risk insulated the fund from further losses.
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