Fixed Income  

ING fund to focus on multi-asset credit and emerging market debt

The First Class Yield Opportunities fund will seek to combine the skills of ING’s multi-asset, credit and emerging market debt teams, including its bottom-up selection process expertise and the top-down asset allocation experience of its multi-asset boutique.

Management duties for the fund have been handed to Ewout van Schaick, head of multi-asset strategies, and Roel Jansen, the firm’s head of European investment grade credit.

Investments within the ¤35m (£30m) fund will focus on bonds that offer an attractive yield, while also taking into account the apparent risk which will be regularly monitored by ING and could potentially be scaled down in times of high volatility.

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To help meet its return and risk objectives, the portfolio managers have been granted flexibility to move between various credit markets, with a strong focus on bottom-up instrument selection, top-down allocation and downside risk management.

Derivatives may also be employed to achieve investment goals, including futures, money market instruments, interest rate and performance swaps, while forward and future currency contracts could be utilised to help hedge against currency risks.

There are presently six share classes open to investors, with ongoing charges varying from 0.16 per cent to 1.2 per cent.

ING confirmed that there is currently no sterling share class, although one could possibly be introduced in the future.

REACTIONS

Provider view

Hans Stoter, chief investment officer for ING, said: “Global credit markets have proven to be an attractive investment over time and can be an attractive diversifier for a government bond-oriented fixed income portfolio. Returns across global credit markets, as well as returns over time, deviate significantly which illustrates the importance of dynamic asset allocation.”

Adviser view

Hayley Tink, chartered financial planner for Norfolk-based Almary Green Investments, said: “Something of that nature could definitely be of interest. It seems to be filling a space at the moment and a multi-strategy approach in the fixed-income sector is quite innovative. It goes beyond your average strategic bond fund and more options are a good thing for advisers to deal with. In terms of the risk, one thing that really stands out and will be interesting to see is how the currency contracts and derivatives are managed.”

Charges

While there is no performance fee, there are a number of other charges that vary depending on the six different share classes. Ongoing charges vary from 0.16 per cent to 1.2 per cent, while maximum management fees have been set at rates between 0 per cent and 1.2 per cent. Other charges include fixed service fees, from 0 per cent to 0.25 per cent, maximum subscription fees, from 0 per cent to 5 per cent, and maximum conversion fees on two of the share classes, which are 3 per cent in Belgium and 1 per cent elsewhere. Only one share class incurs a maximum service fee of 0.15 per cent but it does not carry any other charges.

Verdict

The flexibility of this fund’s mandate is certainly a positive factor, given the difficulty of securing decent yield in today’s fixed-income market, although it also brings uncertainty as to the risks involved. ING boasts plenty of experience in this field but, with the potential use of derivatives and switching risk profiles, it is definitely worth scrutinising its suitability for the average risk-averse.