We profile some of the most interesting fund launches in recent weeks and examine the performance of a product already on the market.
US CORPORATE BONDS
Columbia Threadneedle Investments has launched a US investment grade corporate bond fund.
The fund’s portfolio will be managed by a Minneapolis-based team. The team aims to generate a total return from income and capital appreciation, and will focus on security selection and industry rotation as the primary sources of value, with an added focus on downside risk.
The fund mirrors an existing investment grade corporate fixed income strategy managed by the team for US investors, which has returned 10.89% net of fees since its February 28, 2009 launch.
The fund’s benchmark is the Barclays US Corporate Investment Grade Index, and the fund’s performance target is +100 to 150 bps above the index (gross) over a full market cycle of five to seven years.
Portfolio holdings will be selected on a bottom-up fundamental basis.
The fund is intended for distribution across the European Union, pending regulatory approval in each individual member state.
Columbia Threadneedle manages around $24 billion (€21.5 billion) in US investment grade funds, and also operates global investment grade corporate bond strategies.
GLOBAL CREDIT
Nikko Asset Management has launched a Global Credit fund for Holger Mertens, head portfolio manager in the firm’s global credit division.
The fund targets an excess return of 1.5% against the Barclays Global Aggregate Corporate index, an absolute return target of 4%, and will invest in a portfolio of 70-120 global corporate bonds.
The fund’s global outlook allows managers to fuse liquidity of developed market bonds with higher yields offered by developing markets.
Mertens joined Nikko AM from Lazard Asset Management last year, where he spent 13 years in the firm’s fixed income division.
The fund can allocate a maximum of 30% to high yield bonds, and will favour issuances by service companies over manufacturers.
The fund, the latest in Nikko AM’s Ucits range, is available to wholesale and institutional investors, with an ongoing management fee of 0.8%, and up to 0.2% in operating costs.
LONG/SHORT
Tages Capital and specialist boutique Anavon Capital have teamed up to launch a long/short Ucits fund.
The fund is the second to be issued by Tages Capital under a Sicav umbrella fund structure. It launches with €25.4 million of institutional capital, and a further €30 million of commitments.
The fund will employ a fundamentally driven research approach, focused on selecting individual stocks that deliver both long and short alpha.
The strategy seeks superior risk-adjusted returns with a focus on risk management and capital protection during downturns.
Tages and Anavon have a longstanding relationship, with the former having previously invested significantly in the latter’s funds.
Tages Capital, an alternatives and credit specialist, currently manages assets of around €2 billion. Anavon, a boutique focused on long/short strategies, manages assets of €250 million.
The fund is open to institutional and retail investors across the European Union.
HIGH YIELD BONDS
Neuberger Berman has launched a global high yield bond fund, offering investors access to high yield bonds in North America, Europe and emerging markets via a single vehicle.
Patrick Flynn is lead manager on the fund, working in conjunction with Neuberger’s US high yield team, as well as the managers behind the group’s European high yield bond strategy and its emerging market debt vehicles.
Flynn already manages Neuberger Berman’s existing $7.8 billion (€6 billion) high yield bond fund. Over the past 10 years, the fund has returned 7.56%, while its benchmark, the Merrill Lynch US High
Yield Master II Constrained Index, has returned 7.49%. It has, however, consistently underperformed its benchmark over the past five years.
A spokesperson for the firm said global high yield markets have grown more than 250% in the past decade, with expansion largely coming from Europe and emerging markets, leading the asset class to deliver equity-like returns with low volatility.
Commenting on the launch, Flynn said the global high yield universe had developed “markedly” in recent years, with investors attracted to its defensive characteristics and low correlation to other assets.
The fund is open to investors across Europe.
ONE YEAR ON
A year ago, Old Mutual Global Investors launched its global equity income fund. Since launch, the fund has returned 24%, against benchmark performance of 18% It currently holds assets of $123.77 million (€139.8 million). The fund seeks to deliver a total return by targeting dividend yield and capital growth through investment in a highly diversified portfolio of global equities, and aims to achieve an income of 30% above its benchmark (the MSCI All Countries World Index), which is distributed on a monthly basis.
The management team adopts a dynamic investment process, focused on stock selection through analysis of fundamental company data alongside share price information and a view on the market environment, driven by market variables. The team say they look beyond traditional income generation areas to achieve diversification from concentrated, style-biased funds.
The fund’s portfolio varies in size as a result; as of July 31 this year, it is comprised of 520 holdings; around 50.5% of this total are sourced from US equity markets, with international equities accounting for 17.5%.
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