DENMARK - Schroders is to roll out a strategic credit fund at the end of October which blends active corporate bond management with concentrated "best ideas" credit strategies.
The new offering, which complements the firm’s strategic bond fund, launched two years ago, will target institutional investors including Denmark’s labour market pension funds, which form the country’s second pillar and life insurance companies.
Ketil Petersen, assistant general manager, Schroder Investment Management Fondsmaeglerselskab, said: “The credit spread has narrowed, it’s never been as low as it is now so what we have come up with is a strategy where you can make money even if the credit spread widens out again.”
The fund will own undervalued credit markets and sectors; overlay credit specific derivatives strategies; hedge all currency exposure to euro and concentrate best ideas. The annualised volatility in the fund will be 3-6%.
“Over the last 10 years, the development has been that people invested in government bonds, they invested in mortgages, then corporate bonds, high yield and emerging market debt, so this is the next step in this development,” Petersen added.
“We’re basically using the enlarged derivatives market to create another structure in [the investor’s] portfolio. When we talk about the futures market and the liquidity in the credit default swap market, they are quite large and quite liquid so there are different opportunities than we had previously.”
PTL has appointed Karein Davie as a client director in its Birmingham office.
The level of interest rate hedging increased to £29.5bn of liabilities in the second quarter as pension funds continued to de-risk, according to BMO Global Asset Management's research.
UK inflation has risen for the first time since November to 2.5% in July, up from 2.4% in June, thanks to rising fuel costs and the price of computer games.
The number of DB pension scheme trustees targeting a buyout with an insurer has increased significantly in the past five years, latest research from Willis Towers Watson shows.