Stratton Street Capital has teamed up with Universal-Investment to launch two global credit Ucits sub-funds, with Stratton Street acting as asset manager and Universal-Investment Luxembourg SA acting as the management company.
The Stratton Street Ucits – NFA Global Bond Fund UI and the Stratton Street Ucits – Next Generation Global Bond Fund are both focused on exposure to developed and emerging market bond indices. The funds are targeting higher income than typical investment grade indices.
In terms of differences, the NFA Global Bond Fund UI will invest in hard currency global investment grade credit, while the Next Generation Global Bond Fund UI will invest a minimum of 80% of the fund volume in hard currency global investment grade credit, but also in some high yield and active currency exposure – up to 20% of this fund can be in sub-investment grade hard currency credit. Currency exposure can be up to 25%.
The idea behind considering both developed and emerging markets for credit instruments rests on the fact that fundamentally many developed markets have considerable debt levels and thus may represent greater risk, says Andy Seaman, partner & CIO of Stratton Street Capital.
“Conversely, many countries classified as ‘emerging’ have strong fundamentals, low levels of government debt, high credit quality and incomes well above those of many ‘developed’ countries.”
“Whilst there are pockets of the global economy picking up, our view is that both growth and inflation will remain relatively benign for the foreseeable future. Our view remains that the yield curve will flatten and we favour positioning at the long end of the yield curve in high grade undervalued credits. Both sub-funds, albeit with differing risk/reward characteristics, are designed to protect on the downside as well as capture upside through identifying heavily undervalued credits.”