Credit Suisse floats fixed maturity bond fund
In September, Credit Suisse Asset Management is offering investors the opportunity to partake in a bond fund with a fixed maturity.
The fund invests mainly in USD-denominated corporate bonds with a maximum maturity on 30 September, 2020.
The target allocation of the fund includes both investment-grade and non-investment-grade bonds from developed and emerging markets. The fund’s portfolio is projected to have an average investment-grade rating.
The actively managed fund invests mainly in bonds that will mature close to the fund’s maturity date. Depending on market conditions, the projected gross yield-to-maturity is between 3% and 3.5%. For non-retained USD share classes, the fund aims for semi-annual payouts of 2% p.a.
The Ucits-compliant fund domiciled in Luxembourg thus provides investors with an attractive yield in a market environment characterized by very low – and even some negative – interest rates, the asset manager said.
This allows the fund to have a payout structure similar to a single bond investment, but the potential risk of loss through default by an individual issuer is significantly reduced, thanks to the broad diversification of the portfolio. Daily redemption opportunities also ensure high liquidity.
The subscription period for this fund ends on September 28, 2016. After this, fund subscriptions are possible with a dilution levy through the end of November.
An earlier closing is possible if subscriptions become disproportionately high over time. The fund is approved for distribution in Germany, Austria, Switzerland, Liechtenstein, Luxembourg, United Kingdom, France, Italy, Spain, Netherlands, Norway, Sweden, and Finland as well as Singapore.
“By holding onto the bonds until maturity, investors benefit first from regular returns over a fixed time horizon. At the same time, the interest rate and spread risk decreases as the bonds move closer to maturity,” said Romeo Sakac, senior portfolio manager at Credit Suisse.