Australian financial services group Challenger is to launch a higher yield corporate bond fund to in...
Australian financial services group Challenger is to launch a higher yield corporate bond fund to intermediaries this October, writes Simon Falush.
The product, which will have an Isa wrapper, is to be run by Peter Smart of Brewin Dolphin. This is the first of a planned series of product launches by Challenger, which took over traded endowment policy specialist Neville James earlier this year.
The portfolio will have up to 25% in higher risk paper with a core 75% in investment grade corporate bonds.
Peter Mason, investment director at Challenger, said: 'It is often possible to find bonds which are cheap relative to their level of risk.'
The final details of the product have yet to be finalised but Mason said that the annual management charge would be around 1% with a 1% entry fee. He said that a monthly income facility would be a feature of the product after market testing had shown there was a demand for it from clients.
Neville James has a range of offshore products, and Challenger is now seeking Imro approval to launch an onshore Oeic, of which the corporate bond portfolio would be the first subfund. Mason said Challenger will not be seeking to compete directly with larger fund management operations in the future.
He added: 'The products we will be launching will be aimed at a medium risk niche in the market, so products to come will not be UK growth type portfolios but will include industry specific funds like biotech or small caps.'
Challenger is also looking to launch a capital guaranteed fund separate from the Oeic umbrella, that will be invested in equities.
The company has recently expanded its sales force so that it now has nine regional sales managers and it plans to build up its back office staff so that it has one back office member of staff for each salesman. The Australian parent company has been quite aggressive in expanding in the Australian market having bought 14 businesses in the last year according to Brett Newman, executive director of the UK branch of Challenger International.
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