UK/US - Cairn Capital is to launch a Subordinated Financials fund with £39m ($60m) seed capital from the Stanhope Pension Trust and San Bernardino County Employees' Retirement Association.
The fund, which is expected to go live on 3 October, aims to deliver double digit annualised returns from investments in subordinated financial debt instruments and primarily legacy instruments predominantly within Europe.
Cairn believes the sovereign and regulatory stresses impacting the market are providing an opportunity to generate excellent risk adjusted returns for investors. The fund will take advantage of recent selling pressure and high levels of dispersion. The London-based credit specialist claims it should be possible for the fund to return 15-25% annualised returns with the potential for even greater returns within the first year.
Cairn has managed pension fund assets within this strategy in segregated accounts since 2009, but believes the time is now ripe for capturing the upside in this part of the credit markets.
Senior portfolio manager, Philippe Kellerhals said: "We think that the asset class offers exciting opportunities longer term, but with particular value over the next 12 months. The market is under incredible stress at this point which is providing excellent entry points to certain assets that we think are mispriced, even under selected sovereign default and recessionary scenarios. Many of these assets are fundamentally sound but oversold."
Chief investment officer Andrew Jackson added: "Even though our approach at Cairn Capital tends to be long-short, this is one of those rare opportunities where outright value is extremely compelling."
The 100 largest global pension funds are widely ignoring climate-related risks despite recent warnings by UN scientists, the Asset Owners Disclosure Project (AODP) says.
Premier Inn owner Whitbread has cut its defined benefit (DB) pension deficit to £162m ahead of its agreed £3.9bn sale of Costa Coffee to Coca-Cola.
Trends in longevity and mortality have proven difficult to forecast historically, but are vital to funding schemes and ensuring adequate retirement pots. James Phillips explores the key influences
The two-sided simplified annual pensions statement should be applauded, even if it missing information, says Jonathan Stapleton.