US Money Managers Payden & Rygel is launching Dublin-listed dollar and euro Liquidity funds next mon...
US Money Managers Payden & Rygel is launching Dublin-listed dollar and euro Liquidity funds next month.
The funds will have daily liquidity and invest in fixed-income assets with an average life of 18 months and aim to return 1% above Libor over a five-year period.
The portfolios are run almost identically to funds out of Payden's Los Angeles office. However, the dollar fund has a preference for US sovereign bonds, the euro fund likewise for Government bonds. Furthermore, both have their entire foreign currency exposure hedged into their native denomination.
This is the third off-the-shelf money-management product the company has introduced into Europe and reflects the increasing desire for large-scale investment managers to put cash in short-term funds.
The funds have no entry or exit charge, no bid/offer spread and have a 0.2% annual charge. The minimum investment for the funds is $100,000 or E100,000 but the portfolios are, aimed at those with substantially more.
Sovereign bonds and high-grade global corporate debt form the majority of the investments, a small amount of high-quality emerging market debt can be bought. The funds are designed to fill the gap between money market funds and long-term bond funds.
Robin Creswell, who heads up Payden & Rygel in the UK, said: "When the fund launches we expect it to be around $50m. Then we hope it will get to a similar size to our US funds around $400m to $500m."
Payden has been running similar funds for US companies since 1983. The fund manager believes the introduction of the euro and the destruction of local currencies will cause large single currency pools of money to form, which will be large enough for Payden to run both efficiently and profitably.
Payden manages $31bn in the US. Of this, $14bn is in cash and short-term assets and it is the institutional techniques from these funds that will be replicated in the new products.
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