Ignis brings global government bond fund to Germany
Ignis has registered its Absolute Return Government Bond Fund for sale in Germany, at a time of extreme dislocation in debt markets, and as some allocators say finding good managers in the strategy is hard to do.
Johannes Maier, head of the fund of funds unit at Deutsche Postbank Financial Services, singled out government bond funds, along with European corporate bonds, as an allocation that is particularly difficult to fill at the moment.
Yields on ‘safe harbour’ debt are negligible, while yields from peripheral European paper “are high for very good reason”, one German-based fixed investor said recently.
Matthias Hoppe, vice president and portfolio manager with Franklin Templeton’s Multi-Asset Strategies, said late last year his products had 15% in Bunds and US Treasuries, “but they are not held for the yield – they they offer some level of security, but are not sustainable positions over the long term.”
Ignis’ €131m long/short offering in the government bond sector is now ready for distribution in Germany, as well as in Luxembourg, Spain, Austria, France, Sweden and Finland.
It seeks absolute returns on low volatility, by investing in global debt and currencies.
The firm’s 12-member rates team manages more than €23.4bn specifically in these areas.
The fund is run by Ignis’ head of rates, Russ Oxley (pictured), and chief economist Stuart Thomson.
Between its launch on 31 March and 31 December, it made 6%, compared to 0.7% from the European Overnight Index Average (EONIA) over the same period.
The team behind it uses an inhouse system called ClearCurve, which breaks down government yield into discrete forward rates. The firm says this “allows specific forward rates to be targeted, enabling the Ignis rates team to exploit pricing anomalies more accurately”.
Philip Goldsmith, managing director, Europe, says: “This is a pure alpha fund that we are confident will continue delivering consistent positive returns, regardless of the chaos in global sovereign bond markets.”
The annual management charge for the fund is 0.3%, and a 10% fee is charged on performance above EONIA, only after the managers have made good any past losses. There is an initial charge of up to 5%.