Old Mutual bond fund

Old Mutual Global Investors is set to launch the OM Absolute Return Government Bond Fund on 7 October.

The fund, which will have £100m seed capital from Old Mutual, will be diversified from global fixed income markets by employing a strategy focused on expressing views on macro themes through exposure to forward interest rates, inflation expectations and foreign exchange.

It will be managed by Russ Oxley and co-managers Adam Purzitsky and Paul Shanta.

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Key Features

The objective is to deliver positive total returns on a rolling 12-month basis with stable levels of volatility uncorrelated to bond and equity market conditions

It will target overnight cash plus 5 per cent a year

It will likely exhibit low correlation with other absolute return investment strategies, including fixed income, equity and multi-asset based strategies

There will be a strong emphasis on investing in highly liquid assets, in which the market has historically remained liquid even in the most extreme periods

Adviser View

Gordon Bowden, director of Buckinghamshire-based Quainton Hills Financial Planning, said: “It sounds optimistic. If it can deliver what it says, then great, but I’m sceptical it can in an absolute return government bond. If it can deliver positive total returns on a rolling 12-months basis and cash plus 5 per cent, then it sounds too good to be true. I’d be more tempted if it said cash plus one or two per cent.”