Mirabaud Asset Management has launched a high yield bond product for its latest recruit Andrew Lake, who joined the group from Aviva Investors at the start of the year.
The Mirabaud Global High Yield Bond fund is a UCITS IV offering structured as a Luxembourg SICAV. It has come to market seeded with approximately $100m of assets.
The group has also appointed Crédit Agricole’s Alexander Lushnikov as an analyst to support Lake (pictured) on the fund.
At launch the 80-holding portfolio has an equal split between the US and Europe, with an average B rating on credits held within the fund.
“B-rated credits are the sweet spot for us in Europe, although in the US we like BBs, and we will buy CCCs opportunistically,” said Lake.
The manager also has the flexibility to invest up to 10% in emerging markets, and to use credit default swaps as part of a macro overlay.
At the sector level, the fund is exposed to telecoms, US housing, UK healthcare, and energy, but is avoiding retail, chemicals, and food producers.
Although investors are starting to rotate from bonds to equities, Lake said high yield should remain a part of portfolios, albeit with a lower allocation, because the asset class can match equity income yields but with lower volatility.
The manager expects the corporate refinancing theme to continue this year, as businesses tap capital markets for cheap finance, while default rates are unlikely to rise significantly.
“Default rates will remain low this year at 2%-3%. If we continue to see volatility in Europe, this figure could tick up slightly, but historically it is still very low,” he added.
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