Fixed Income  

Fund review: Nordea 1 - Unconstrained Bond

Nordea Asset Management has launched the Nordea 1 – Unconstrained Bond fund, set to exploit fixed income opportunities through multi-sector asset allocation and active duration management.

The fund is managed by US credit fixed income specialist MacKay Shields, which runs $80bn of assets, including credit portfolios for Nordea.

The fund’s flexible mandate allows it to invest across the global fixed-income spectrum, and it aims to mitigate downside risk and generate attractive risk-adjusted returns.

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The fund plans to hold 65 per cent high-yield securities, with 35 per cent investment grade. It is benchmarked against the Barclays US Aggregate index, and has an expected volatility of between 4 and 8 per cent per annum. The fund’s annual management fee is 1.1 per cent.

www.nordea.co.uk

Comment:

This new fund adds to Nordea’s already impressive fund range, giving investors an even broader suite of investment strategies and ideas to choose from. It may sound like a risky investment, but if anything, this could be safer due to its ability to eliminate interest rate risk by having shorter duration.

As investors face an uncertain market in the coming years, with the likelihood of interest rate increases and a widening of credit spreads over the longer term, this fund gives the managers tools to deal with these eventualities and effectively manage risk.

MacKay Shields has built up a strong track record in fixed-income investing for more than four decades – while fund manager Dan Roberts has more than 34 years of investment experience.

While it operates and invests independently, MacKay Shields also offers investors the added security of being an affiliate of New York Life Investment Management, a $402bn asset manager.

Nordea, which is aiming to provide UK and European investors with access to top global investment talent, is building a nice suite of products across a number of asset classes. The Unconstrained Bond fund looks set to be a continuation of this.