Smith & Williamson launches Global Government Bond fund

Smith & Williamson (S&W) is launching a Global Government Bond fund for manager Chris Lynas, assisted by fixed income director Robin Marshall.

The Dublin-domiciled fund will invest in sovereign and quasi-sovereign bonds, both conventional and inflation-linked, with the ability to hedge out currency exposure. It will have a cash buffer of up to 10 per cent, and can invest up to 20 per cent in investment grade corporate bonds, although Mr Lynas said he was unlikely to make use of this ability for some time.

Mr Marshall, who will act as an adviser to Mr Lynas on the new fund, said: “This isn’t the top of the government bond market. Real yields were negative between 1945 and 1980, so the fact that we have negative real yields again is not unusual. There is no reason why you cannot make money with negative real yields if inflation accruals continue to be profitable.”

Mr Lynas has run the group’s outperforming £49.5m S&W Fixed Interest fund since 1998 and co-manages its £348.9m Short-Dated Corporate Bond fund with Ian Kenny.

The new fund’s retail share class will have an annual management charge of 1 per cent and a minimum investment of £1,000. S&W is waiting for approval from the Irish regulator and the FSA to before launching the fund.