Old Mutual Global Investors (OMGI) has announced that the Old Mutual Absolute Return Government Bond Fund will launch on 7 October 2015.
The strategy will have £100m seed capital from Old Mutual plc.
The fund will be managed by Russ Oxley and his team, who joined Old Mutual Global Investors from Ignis Asset Management earlier this year. Russ, the Lead Manager, and Co-Managers Adam Purzitsky and Paul Shanta, will be supported in their portfolio management and trading by Huw Davies and Jin Wong, and in systems development by Josh Heming.
The objective of the fund is to seek to deliver positive total returns on a rolling 12-month basis with stable levels of volatility uncorrelated to bond and equity market conditions.
Targeting overnight cash plus 5% per annum, the fund aims to be diversified from global fixed income markets by employing a highly distinctive investment strategy focused on expressing views on macro themes through exposure to forward interest rates, inflation expectations and foreign exchange.
Forward rates provide a rich source of uncorrelated investment opportunities, since different forward rates are influenced by diverse factors and different market participants.
The low correlation with global bond markets is likely to be appealing at a time when the traditional safe-haven role of government bond markets is increasingly questionable.
Due to the distinctive process and avoidance of credit and credit-like assets, and of emerging market debt the fund is also likely to exhibit low correlation with other absolute return investment strategies (including fixed income, equity and multi-asset based strategies), making it a potentially attractive addition to a well diversified portfolio.
The portfolio managers will place a strong emphasis on investing in highly liquid assets, in which the market has historically remained liquid even in the most extreme periods, including for example the global financial crisis.
Warren Tonkinson, Managing Director of Old Mutual Global Investors comments: “We are delighted that Old Mutual will be supporting the strategy with £100m of seed capital at launch. This demonstrates the belief we have in the strategy and our commitment to this fund.
“This is a very exciting development for our company as a lot of work has been undertaken to prepare for this launch. We have had a lot of interest from investors as Russ and his team are highly respected, having one of the best track records of managing absolute return government bond funds in our industry. We are confident that demand will be strong from our global client base.”