Fixed Income  

Aberdeen ventures into bonds with launch of strategic fund

The new fund will be managed by the London-based Aberdeen global credit team, led by Oliver Boulind, head of global credit and global high yield.

According to AAM, the team aims to achieve a long-term total return by investing primarily in a diversified portfolio of global investment and sub-investment grade debt and debt-related securities issued by companies, governments, government-related bodies and supranational institutions. It will also be employing the firm’s comprehensive bottom-up investment approach under Boulind, who joined the firm in July last year.

The launch of the fund comes amid rising demand from investors looking to generate positive real returns from the current low growth environment, while adhering to a comprehensive risk management framework. AAM said that the fund has the ability to dynamically adjust its asset allocation across both corporate and government bonds to best suit the changing economic environment and market conditions.

AAM said that many investors are questioning their fixed income exposure after a 30-year bull run in bonds, and that while low yields in many markets do not match the weak fundamentals, opportunities do remain for investors with a dynamic and global remit.

From a global universe of around 20,000 debt issuers, Aberdeen aims to build a portfolio of around 100 to 200 holdings.

The firm has an existing global fixed income footprint, with US, European, Asian and emerging market capabilities, and the last financial year (to September 2012) saw what AAM notes as “a healthy interest in Asian fixed income capabilities”, although the majority of its inflows still came from global equity products.

Overall fixed income flows remained negative for the firm, primarily due to outflows from the more traditional developed market strategies, according to AAM’s year-end results statement. The Q4 statement also claimed that all major fixed income strategies were ahead of their respective three-year benchmarks.

Provider view

Oliver Boulind, head of global credit and global high yield at Aberdeen, said: “A strategic approach to bond management provides investors with several benefits. It enables the fund to invest in a variety of markets and the flexibility to increase or reduce exposure. For instance, there are times in a market cycle we will want to reduce risk dramatically and in this fund we have those tools. The fund has the added advantage of having a truly global footprint with strong regional analysis being carried out by teams on the ground around the world.”

Adviser view

Ross Yiend, partner at Plutus Wealth Management, said: “It’s an interesting time for Aberdeen to release a strategic bond fund with there being a switch out from the bond funds into more risk-based assets. The bond sector has seen significant outflows across all funds in the sector over the past six months, which wouldn’t be a good sign when looking for new monies into a newly released fund. The fund, however, will take a global diversified approach and may be able to position itself well for an investor aiming to achieve long-term real returns by being able to adjust its asset allocation to reflect the changing economic and market conditions.”