The newly founded Berlin fund boutique Capitulum Asset Management and Universal Investment have launched the first two mutual funds as a seamless continuation of the successful product family around the world interest rate approach for global interest rate strategies.
The two funds are Capitulum Weltzins-Invest Universal, a global bond fund with a focus on local currencies, and the interest rate and currency hedged option Capitulum Annuity Optimised Universal.
Lutz Röhmeyer, founder Capitulum Asset Management was previously responsible for fund management at LBB-Invest, which has now been integrated into Deka.
Active, fundamental and benchmark-thinking ‘strategic investor’ approach
According to Lutz Röhmeyer, Capitulum Asset Management’s global bond strategies aim to systematically capture the attractive internationally available interest rate advantage of systematically selected bonds in all market phases, and not just in the current low interest rate environment, without overly encumbering the risk side of the bond portfolio through absolutely index-free investing.”
As a strategic investor, Capitulum pursues disciplined buy-and-hold approach to reduce transaction costs with a staggered ladder maturity portfolio. In the case of a short fixed-interest period, this keeps the duration risks low, even with rising bond yields.
A key feature of the funds is and remains the widest possible diversification at all levels in over 70 currencies and several hundred bonds from a wide range of issuers in the target allocation. By focusing on supranational issuers such as promotional banks, default risks are limited with the A rating sought, while still generating an attractive yield yield. Even in the fully-fledged version with interest rate and currency hedging, the goal is to post a year-end return on top of other investments. The targeted annual high dividends in both fund concepts complete the profile.
Global interest rate markets in local currencies with positive earnings prospects despite turnaround
Due to the “Europhorie”, the historical weakness of the US dollar in 2017 weighed on the investment performance of globally investing bond funds as a whole. This currently provides a very low starting point for high-yielding local currency investments combined with favorable fundamentals. For example, the first self-sustaining and synchronised economic upturn since the global financial market crisis has been observable worldwide in the last decade. At the same time, the macroeconomic imbalances evident in the 2013 tapering confusion were corrected, making markets less vulnerable to risk.
Even in times of interest rate turnaround, the pressure to invest in the low interest rate environment continues to be felt. It will take a long time for bond yields in the developed economies to return to an adequate level. There are also increasing interest rate and credit risks. For example, investments in local currencies are particularly attractive for regulated investors because they offer a high interest rate advantage without affecting the rating limits. This advantage in turn ensures the high ordinary interest income that is urgently needed for distributions.