AUSTRIA - Spängler Fonds KAG, a subsidiary of Austria's oldest bank, Bankhaus Spängler, is hoping to lure traditionally risk averse Austrian investors to the US hybrid market with the launch of a new fund.
The new open-ended vehicle, the Spängler Bond Portfolio Preferred Securities Fund, is open to institutional clients.
The fund will invest primarily in a portfolio of US$ denominated preferred securities and debt securities.
It will be managed by Principal Global Investors - the fund manager’s first sub-advisory contract in Austria. Spectrum Asset Management, an affiliate of Principal and based in Connecticut, US, will act as adviser, investing in the preferred securities of strong, highly rated companies, instead of buying senior debt from lower quality issuers.
The move is an important step for Principal who are looking to increase their European presence.
Nick Lyster, director of sales at Principal Global Investors (Europe), said: “In an environment of lower yields in the bond markets and continuing uncertainty in the equity markets, hybrid preferred securities have the potential to offer investors diversification, preservation of credit quality, liquidity and the ability to maximise returns.
“Hybrid preferred securities are generally the highest yielding investment grade securities in the US capital markets.”
The US hybrid preferred securities market, created in 1993, is now worth approximately US$200bn and is continuing to grow at about 20% per annum.
Subscription to to the new fund is e100 per unit.
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