Santander AM targets ECB rate hike with fund launch
Santander Asset Management (Santander AM) has launched the Santander Renta Fija Flotante fund, a floating rate fund designed to tackle the effects of a potential interest rates hike by the ECB during the second half of 2019.
Santander Renta Fija Flotante, recently registered in the Spanish National Securities Market Commission (CNMV), will invest in floating bonds and seeks to minimise losses in the most conservative portfolios as well as to make some profitability of an asset class such bonds currently offering small opportunities.
The fund will invest in European public bonds (states, autonomous communities or other public bodies) and in private bonds (corporate).
Floating bonds are those whose profitability and coupon are linked to the price or evolution of an interest rates index with periodic review. In this case, these indices will be European, such as Euribor, Líbor and Eonia.
The fund’s short duration will make it less sensitive to the bonds’ losses when the interest rates rise and their prices fall and, it will perform better as long as the interest rates indexes go up.