Fixed Income  

Morgan Stanley latest to launch short-duration bond fund

Morgan Stanley latest to launch short-duration bond fund

Morgan Stanley Investment Management (MSIM) has added to a rush of asset managers looking to attract risk-averse investors by launching a short-duration bond fund.

The strategy, which tends to buy bonds with duration exposure between one and four years, has become popular as longer duration bonds experienced more volatility, beginning with a flattening of the yield curve in several economies.

The Morgan Stanley Investment Funds Global Buy and Hold 2020 Bond fund will compile a "globally diversified list of holdings" from areas including investment grade, high yield corporates, emerging market debt and government bonds.

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The Luxembourg-based Sicav, which is available to UK investors with an ongoing charge of 0.49 per cent, will buy and hold bonds with an expected maturity of roughly four years, and aim to provide regular income over that period.

MSIM is the latest to join the push alongside Aberdeen, which launched a fund earlier this month, Axa Investment Managers, Canada Life Investments and Royal London Asset Management.

However, the US bank's asset management outfit is one of few to target a range of risk-rated instruments in a single fund.

Jim Caron, one of the portfolio’s lead managers alongside Marco Spaltro, Leon Grenyer and Joseph Mehlman, said: “For investors seeking a stable source of income in the current climate of lower yields that is vulnerable to bouts of higher volatility, we believe this fund is very attractive because it can serve to reduce volatility and increase diversification of income in one’s portfolio.”