Old Mutual Global Investors (OMGI) has unveiled plans to merge the Old Mutual Absolute Return Government Bond fund into the Old Mutual Strategic Absolute Return Bond fund.
The merger follows a review of the manager’s absolute return fixed income capabilities and is due to occur on 27 July 2018, subject to shareholder approval.
OMGI explained both funds have the same investment objective, namely to seek to deliver positive total returns on a rolling twelve month basis, with stable volatility, uncorrelated to bond and equity market conditions, and a broadly similar investment policy, to invest primarily in global government bonds.
Their investment processes diverge nevertheless as the Old Mutual Strategic Absolute Return Bond fund invests in a broader investment universe with lower levels of leverage.
OMGI believes the merger will enable shareholders of the Old Mutual Strategic Absolute Return Bond fund to achieve exposure to an absolute return global bond strategy delivered via a more diversified investment approach. Moreover, annual management fees will be lower.
Following the proposed merger, the co-heads of the Absolute Return Government Bond fund, Adam Purzitsky and Paul Shanta, as well as three other members of the team, will be leaving the business to pursue other opportunities, OMGI announced.
Huw Davies, currently investment director on the fund being merged, will join the wider fixed income team in the same position and Vytaute Maciulskyte, currently analyst on the fund, will become an analyst for the Old Mutual Systematic Positive Skew fund.
Warren Tonkinson, managing director, OMGI, commented: “Aligned with our ambition to offer a market-leading fund range, we have identified an opportunity to simplify our proposition. We believe the proposal to merge the Old Mutual Absolute Return Government Bond fund into the Old Mutual Strategic Absolute Return Bond fund is in the best interest of investors who are seeking to achieve a positive total return, while benefiting from exposure to a more diversified investment strategy and lower fees. We are confident that following this change, our fund range will be well aligned with investor demand.
“We are grateful for the contribution the absolute return government bond team has made to the business and wish them the best of luck for the future.”