Candriam, a European asset management firm, has launched what it calls a defensive bond fund that can invest in corporate and sovereign bonds.
The fund has a target return of 1 per cent above the Eoina rate.
Eoina is the Euro Overnight Index Average, the average rate at which banks in the Eurozone lend to each other, similar to Libor.
The fund will be managed by Damien Martin, with Nicholas Forest and Alain Peters as co-managers.
The fund can invest in sovereign bonds, corporate credit and also take positions on currencies.
The minimum credit rating into which the managers will be prepared to invest is BB, which is the upper end of the “High Yield” bond universe.
The fund can use derivatives to hedge exposure and manage risk.
Jason Hollands, managing director at Tilney Group, said the launch of this fund is “timely” given the range of risks faced by bond investors as central banks normalise interest rate policy and unwind their bond buying programmes.
Mr Hollands said: "The fund looks to be aimed at professional investors whose mandates might require them to retain some fixed income exposure but who want to mitigate the risks of a major adjustment in bond prices as yields rise.
"Our preferred fund in the defensive fixed income space is the TwentyFour Absolute Return Credit fund but for investors with greater flexibility in their asset allocation approach who are nervous about fixed income, an alternative strategy for providing some low volatility to ballast to a portfolio could be to choose a multi-strategy absolute return fund instead, such as Invesco Perpetual Global Targeted Income."
david.thorpe@ft.com
