Morgan Stanley Investment Management has launched a new 2020 fixed income fund for investors looking for income returns, but with a lower tolerance for volatility.
The Morgan Stanley Investment Management Global Buy and Hold 2020 Bond fund is structured as a Luxembourg-based SICAV and will be available to investors in the UK, France, Spain and Italy. The base currency of the fund is the Euro.
The strategy will invest in a globally diversified portfolio of Morgan Stanley IM’s “best ideas”, drawn from government bonds, investment grade, high yield corporate bonds and emerging market debt, the company said in a statement announcing the launch today.
The expected maturity of the fund is approximately four years, measured from the start of the principal investment period, hence the 2020 tag.
Four year period
The fund aims to provide investors with regular income over a defined term of four years. It will be managed in three distinct phases – the ‘Asset Gathering Period’ from 21 October to 9 December; the ‘Principal Investment Period’ –from 2016 to 2020; and the ‘Post-Investment Period’ –from January to June 2021.
The Global Buy and Hold 2020 Fund is managed by the global fixed tncome team at Morgan Stanley IM. The lead managers of the portfolio are Jim Caron, Marco Spaltro, Leon Grenyer and Joseph Mehlman.
“For investors seeking a stable source of income in the current climate of lower yields that is vulnerable to bouts of higher volatility, we believe this fund is very attractive because it can serve to reduce volatility and increase diversification of income in one’s portfolio,” said Caron.
‘European government bonds alternative’
“In the current low interest-rate environment, the search for yield from fixed income products has intensified, and this fund may provide a solution to meet the demand from investors looking for an alternative to European government bonds or other kinds of non-diversified fixed income exposure,” he added.
The fund’s portfolio is constructed using a two-pillar approach, drawing upon quantitative modeling and fundamental analysis. The investment approach is not tied to the benchmark, so the final portfolio is not oriented to the market. It aims to “reduce correlation risk and add diversification” to asset allocation , the firm added in its statement.
Morgan Stanley Investment Management, together with its investment advisory affiliates, has more than 590 investment professionals around the world and US$417 bn in assets under management or supervision as of 30 September.