Corporate bond ready for june launch with aim of having credit rating of no less than -A
Rothschild Asset Management is set to launch a corporate bond fund in June, subject to regulatory approval.
Domiciled in Guernsey, the product offers a high level of income with a possibility of capital growth through investing in sterling and euro corporates. A relatively small holding of 10% will be held in corporate bonds in emerging Europe.
Around 70% of the initial portfolio will be in A-rated bonds or above. In the long term, the overall intention of the portfolio is to have a credit rating of no less than -A.
Rothschilds already has a similar product for the institutional market. There has been a growing trend for institutions to invest in corporates and the portfolio will give offshore retail investors the same opportunity. The new fund will be run along similar lines to the institutional corporate bond fund.
Mark Connolly, director and global head of institutional business at Rothschild, said: 'We are seeing a growing interest in our specialist bond management capabilities. Existing clients are shifting benchmark weightings in favour of bonds and away from equities. Within bond mandates, higher benchmark allocations are being made towards non-government bonds.'
The fund will be managed by Danny Fox who uses a combination top-down and bottom-up approach. The fund manager focuses on top-down macro strategy and relative value within the credit markets and credit analysts then undertake detailed bottom-up company analysis.
The investment philosophy for Rothschilds' corporate bond team is that consistent value can be added relative to the benchmark through the fundamental analysis of medium-term economic and market prospects, supported by trend awareness and short-term tactical awareness.
Fundamental analysis of market valuations looks at economic trends and takes advantage of misvaluations over the medium to long term.
Research includes macro- economic, interest rates and exchange rate forecasting, yield curve analysis and risk analysis. Risk is controlled in a portfolio through strategic, tactical, and momentum allocations as well as through credit/micro decisions.
The retail corporate bond fund will have a sterling and euro share class. Minimum investment is £1,000 and e10,000 respectively.
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