BMO Global Asset Management has announced the launch of the BMO Global Absolute Return Bond fund, targeting a return of cash plus 3%.
Its investment approach is unconstrained by a benchmark or particular maturity, credit rating band, sector or geography, but has strict risk limits.
The fund will keep a long bias but can also go short rates and credit.
The core credit portfolio relies on a ‘buy and maintain’ strategy seeking to exploit persistent anomalies in investment grade and high yield securities and is well diversified with over 100 issuers to reduce risk.
“Thematic overlays contribute to return and aid diversification through active management of credit, interest rate and currency risk. Disciplined risk management is used across the portfolio to calibrate risk up or down as necessary,” the firm said.
The fund is a Ucits Sicav domiciled in Luxembourg and provides daily liquidity.
It is managed by BMO Global Asset Management’s fixed income team in London with Keith Patton and Ian Robinson as lead managers.
“The fund aims to deliver stable returns whilst having a different profile to that of global bond markets,” said Keith Patton, co-manager of the BMO Global Absolute Return Bond fund.
“The combination of multiple strategies, working together, provides investors with the opportunity for a smoother overall return profile over time relative to traditional investments.
In addition, the unconstrained approach allows for greater diversification across strategies and for the investment teams to target areas where they have the greatest conviction.”
Ian Robinson, co-manager of the BMO Global Absolute Return Bond fund, commented: “The focus on shorter dated credit securities reduces the cyclicality generally associated with longer maturity bonds. This allows us to be more confident regarding the range of outcomes around the Cash+ 3% target.”
BMO Global Asset Management had AUM of £160bn (€190.6bn) as at 31 March 2016.