GLOBAL - Following the implementation of a 130/30 fixed income mandate at CalPERS, the CIO of Baring Asset Management has predicted the growing US trend for short extension funds in bonds will cross the Atlantic.
In the case of Barings, an existing US$1bn long only mandate was converted to 130/30 after extensive consultation with the fund.
Marino Valensise, chief investment officer at Barings, said of the performance of the CalPERS mandate: "What we thought would happen in terms of information ratio has happened."
Valensise claimed the market for fixed income short extension funds in the US was currently worth $50bn to $60bn and said while he had seen no mandates in the UK as yet, he expected this to change as pension funds demanded higher returns from bond portfolios.
"In the UK, there have been a few attempts to open up investment restrictions in the last couple of years. The US is definitely ahead, but I'm convinced as bond assets are growing and have to produce higher returns, there is a case for this framework to be implemented in the UK as well."
He added: "This trend has got legs."
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