ING launches euro covered bond fund
ING Investment Management Europe has launched a euro covered bond fund with a starting AUM of €100m, domiciled in Luxembourg.
The fund will be co-managed by Roel Jansen, Head of Investment Grade Credit Investments at ING IM, and Dirk Frikkee, senior portfolio manager.
Jansen said: “The market for covered bonds has grown very rapidly as covered bonds have established themselves as a major source of funding for banks in the current financial turmoil. Additionally, they enjoy institutional support evident in the launch of a second ECB Covered Bond Purchase Programme of € 40bn and low risk weightings. This institutional support has positively impacted the asset class and spurred interest from investors.”
Frikkee said: “The major credit rating agencies have slightly different approaches to rating covered bonds, but all focus on the structure of the cover pool and the quality of the mortgages, as well as the issuer’s rating. Most covered bonds carry ratings of double or triple A.”
“Furthermore, Covered Bonds can potentially offer investors yields higher than European government bonds without significantly altering the risk profiles of conservative portfolios.”