Pramerica SGR has launched a flexible bond sub-fund based on the management strategy of the PGIM Absolute Return fund, launched in the USA in 2011 with assets amounting to over $3bn.
Pramerica Sicav Global Absolute Bond Euro Hedged, available to Italian investors, is another global bond strategy of PGIM Fixed Income, an asset manager belonging to the global network of Pramerica Financial, whose assets under management amount to $809bn.
The Fund is an absolute return strategy that combines top-down and bottom-up approaches and is based on rigorous fundamental research, dynamic allocation in bond sub-asset classes for the construction of a diversified portfolio, and presents monitoring and control of portfolio risk on a daily basis.
The sub-fund uses a flexible investment strategy, not tied to benchmarks, which may include active management of duration, credit quality and positioning of the yield curve, as well as a selection of sectors and securities in order to identify the realities that, in the manager's opinion, offer the best risk/return profile.
In addition to bond picking, which is based on rigorous fundamental research and accurate monitoring of the risk of any single position, the sub-fund has two other sources of extra return: the allocation in bond sub-asset classes such as ABS, Emerging Market Bonds, or high yield - an asset class with attractive potential for returns in the face of an increase in the level of risk - and the possibility of taking advantage, also tactically, of the changing opportunities for returns in the fixed income universe, through a portfolio with a limited overall duration (+/- 3 years), the systematic hedging of currency exchange risk and the taking of long or short positions in interest rate swaps, or in futures contracts on Treasuries.
In terms of portfolio allocation, the sub-fund's investments will include sub-investment grade debt securities up to 50% of net assets and asset-backed debt securities, including investment grade collateralised bonds (CDOs) up to 60%.
Andrea Ghidoni, CEO and general manager of Pramerica SGR, said: "In a world characterized by historically low interest rates, the search for returns remains a real challenge, which must be addressed with highly specialized strategies, as well as relying on investment professionals.
"At this stage, absolute return strategies allow investors to more easily access diversified alpha sources. Crucial, however, is the expertise of the management team and the risk management process.
"From this point of view, this new sub-fund offers the possibility of making use of a highly qualified team and a strategy with a solid track record, able to accurately select investment opportunities in global bond markets, controlling the risks through a careful monitoring of each position and the entire portfolio on a daily basis."
According to Pramerica, the systematic hedging of the exchange rate risk of Pramerica Sicav Global Absolute Bond Euro Hedged reduces the exposure to the base currency (other than the euro) of the assets of the sub-fund and increases the exposure to the euro by providing protection from exchange rate volatility.