Bonds  

Kames launches short-dated bond fund

Kames launches short-dated bond fund

Kames Capital is the latest company to launch into the increasingly popular short-dated bond market, with a fund targeting mid-single digit per cent returns through the cycle.

The Short Dated High Yield Global Bond fund, managed by Stephen Baines and David Ennett, supported by Jack Holmes, is focused on the BB and B rated segments of the market.

The target for the fund is corporate bonds with below two-year durations, and a limit of five-and-a-half years.

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Mr Baines said: “Our analysis shows that both in periods of deteriorating credit risk and rising government bond yields, short-dated high yield bonds have shown greater price resilience than the broader high yield bond market.

"They also offer returns that are negatively correlated with government bond market returns.”

Short-dated bond funds are popular with many investors who are worried about rate rises.

Axa Investment Management launched a fund last month.

Scott Gallacher, financial adviser from Rowley Turton in Sheffield, said that these funds are particularly useful at the moment.

He said: “Lots of people are worried about bond duration at the moment, so short-dated bonds are very helpful. The interesting thing is how much value any particular fund can add.”

rosie.murray-west@ft.com