Thames River is launching a high income fund that will invest in emerging market debt. The Thames R...
Thames River is launching a high income fund that will invest in emerging market debt.
The Thames River High Income fund is managed by Mike Mabbutt who joined Thames River from LGT where he was the head of the emerging markets debt desk which managed $1bn.
The fund is denominated in euros and systematically hedges its non-base currency exposure, which is mainly dollars, back into euros.
Mabbutt said: "We find that currencies are notoriously difficult to forecast on a consistent basis, and most European investors feel that there is enough risk in investing in emerging debt without adding the currency dimension."
There will not be any minimum credit rating requirement.
He said: "When it comes to emerging market debt, credit agencies tend to take too long to adjust their ratings, even after a big event like the Asian crisis." The fund will invest in about 15 to 20 securities.
It will not hold more than 20% in the larger markets such as Brazil or Russia, nor more than 10% in the smaller markets, such as the Ukraine or Pakistan.
The portfolio will invest at least 50% of its assets in sovereign bonds where the issue size and the liquidity are bigger than for corporate bonds.
The primary objective of the fund is to generate an income stream, distributed quarterly, equivalent to 10% pa. At present, Mabbutt likes the debt market in Russia.
He is especially encouraged by the rapid rise in the international reserves of the Russian Central Bank. He also likes the Ukrainian market where yields of 25%, in dollars, are being offered.
The Thames River High Income fund will be a Dublin-based Ucits, with a minimum initial investment of e35,000. The management fee is 1.5%.
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