Investec Asset Management will change the investment focus of its existing Investec GSF High Income Bond (USD) fund, developing its Fixed Income product range.
The fund will be renamed the Investec GSF Investment Grade Corporate Bond Fund. It is one of twelve Luxembourg or Dublin-domiciled global corporate bond funds currently available to investors.
The Luxembourg-domiciled fund will mirror the investment process and current positioning of its sister fund, the UK-domiciled Investec Sterling Bond Fund. The onshore fund is presently positioned to invest predominantly in investment grade bonds.
Over five years, the Investec Sterling Bond fund has returned 6.7% p.a. It has delivered top quartile performance over one, three and five years and outperformed the IMA Sterling Strategic Bond sector by more than 10% over the same periods.
As yields on government bonds and cash deposits approach historic lows, both funds aim to give investors higher yields relative to gilts or cash by investing in high quality corporate bonds, without significantly greater risk. There is also potential for capital gains.
John Stopford, co-head of Fixed Income at the firm will run both the Investec GSF Investment Grade Corporate Bond Fund and the Investec Sterling Bond Fund. He will be supported by the fixed income team.
Stopford will take a top-down thematic approach combined with a bottom-up due diligence process and will cover a global opportunity set including emerging market credit.
The approach aims to ensure optimum rating, sector and country exposure aligned to the evolving business cycle. Interest rate exposure is managed separately.
"Following last year's dramatic and indiscriminate sell-off, we believe investment grade corporate bonds stand out as showing exceptional value, over-compensating investors for the risk of potential default and delivering superior risk-adjusted returns," says Stopford.
"History suggests we believe that investment grade corporate bonds could outperform government bonds by up to 10% per annum over the next few years."
While the big picture is compelling, Stopford says detail is also important.
"There is a need for investors to be selective; in building our targeted portfolio of between 60-100 high quality issues, our flexible investment process allows us to ensure that we are confident each position we take offers sufficient reward," he adds.
Paul Bruns and Elaine Parkes
3,000 left to transfer
Record numbers of people aged 90 plus
From 3 to 10 October