Janus Capital International has inaugurated a new absolute return fund investing in global bonds to its suite of fixed income products.
The Janus Absolute Return Income Fund targets positive absolute return as well as preservation of capital with a low correlation to equities and other conventional strategies.
The investment product, which also seeks to mitigate interest rate risk, mainly invests in bonds and other debt securities which are rated investment grade, high-yield or are unrated by ratings agencies.
It will be managed by Kumar Palghat and supported by the Janus Global Macro Fixed Income team. This is the second fund launched by the team, and is complementary to the existing Janus Global Unconstrained Bond Fund, managed by Bill Gross.
The launch of this fund stems from the acquisition of Kapstream Capital, an Australian-based unconstrained fixed-income manager with $7.2bn (£4.97bn) in assets as at December 2015, which Mr Palghat co-founded.
Mr Palghat, former head of Pimco’s Asia Pacific portfolio management, joined Janus as a result of the merger.
Augie Cheh, president of Janus Capital International, said: “Launched in response to client demand, the Janus Absolute Return Income Fund marks another important milestone in our commitment to expanding our fixed income offering for our clients. The new fund aims to provide positive absolute returns with low volatility by investing with an unconstrained approach across the fixed income universe.”
Provider view
Mr Palghat, said: “The Janus Absolute Return Income Fund offers investors a highly differentiated approach to traditional fixed income investing. It aims to avoid the limitations of a duration-weighted benchmark and narrow investment guidelines, instead seeking investments from across global fixed income markets. The portfolio will combine a core of investment grade sovereign, corporate and securitised bonds, as well as an overlay of structural opportunities, while taking advantage of long-term mis-pricings.”
Adviser view
Darren Cooke, chartered financial planner at Derbyshire-based Red Circle Financial Planning, said: “We need to approach bonds with more caution than we have in the past because of interest rate risk. The prospect of a rate rise has been hanging in the air for quite some time now, and when they do rise, bond prices are going to be adversely effected.
“I haven’t had any customers asking to be invested in bonds specifically. I don’t think many clients scrutinise their portfolio to a great extent. Even when you are trying to explain volatility to them, you start to feel their eyes glaze over. All they care about is whether they have made or lost money.”
He added: “Generally, I wait to see the performance numbers before considering a new fund but if the fund is managed by someone who has a stellar track record, it is something I’d consider.”
Charges
Ongoing charge of 0.85 per cent for retail clients.
Verdict
Amid a period of heightened volatility in equity markets, many investors have sought alternative investments in search a proposition that offers stable returns. However, this is not to say that bonds are a less risky alternative. The industry braced itself for what turned out to be a hike in interest rates by the Fed at the end of last year in the backdrop of a slowdown in China and falling oil prices.
