Oddo launches high yield bond fund despite bubble fears

Wheat field1Oddo Asset Management has launched a fund investing in high-yield bonds in Europe, defying fears from some investors that there may be a bubble in the asset class.

The firm's head of fixed income management, Alain Krief, will manage the fund, which will build on the firm's existing range of bond funds that it says have drawn €1.4 billion in sales since 2009.

The fund is part of Oddo's Luxembourg Sicav and is authorised for sale only in France, though procedures to bring it to market in Italy, Switzerland, Germany and Belgium are under way. Investors can subscribe in euros, dollars or Swiss francs.

Some investors have expressed fears that large flows into high yield bonds may foretell a correction in the market, with a few claiming the large inflows amount to a bubble.

Research firm S&P Capital IQ says the average yield on European non-investment grade bonds fell to 6% in January 2013 compared with 11% in early 2012.

However, managers of high yield bonds funds argue the asset class still offers attractive returns in an environment where government bond yields are low and equities volatile.

As of last year, Paris-based Oddo Asset Management looked after €12.7 billion of assets.

©2013 funds europe