Aberdeen Asset Management has launched a sterling denominated short-dated corporate bond fund aimed at investors looking for a conservative means of allocating to fixed income given growing concerns of the impact of rate hikes on the global bond market.
The fund, which aims to attract £100m in the first year, will invest in investment grade credit focusing on securities that mature within five years.
It will be managed by the group’s Pan-European fixed income team who also manage the £1.7 billion Aberdeen Corporate Bond Fund. The team has the ability to allocate up to half the portfolio to non-sterling assets that are then fully hedged back.
Roger Webb, head of Pan-European Credit at Aberdeen, comments on the launch: “We are nearing the end of a 30 year bull market in bonds which raises inevitable questions about how this very important asset class within investors’ portfolios should be invested. In the near term we expect interest rates to stay low reflecting the low inflation and low growth environment we are in, supported by continuing Central Bank buying of fixed income securities. However, into the medium and long term as interest rates revert to a more normal long term level there is a risk of capital erosion that investors could face.”