Pioneer Investments has launched a Diversified Short-Term Bond fund for its Italian client base. The fund is a new active and flexible bond strategy, as an approach to target investment returns in fixed income securities by limiting the exposure to interest rate risk.
The new fund aims to maximize the performance of different components of the bond market – including high yield and subordinated securities – while maintaining an average credit rating of an investment grade portfolio.
The Pioneer Investments Diversified Short-Term Bond fund is characterized by four main components: investment grade floating-rate securities, without interest rate risk; investment-grade fixed-rate securities; subordinated securities of financial and non-financial issuers of hybrid issuers and high yield fixed-rate securities.
“We are in a situation where household portfolios continue to be extremely focused on low to negative yielding assets,” said Tanguy Le Saout, head of European Fixed Income at Pioneer said.
“In fact about 75% of the overall wealth in Italy is invested in bonds or liquid assets, in a period when Central Banks are cutting interest rates to historic lows. Increasing the duration of the bonds in their portfolio or the average risk could create significant risk of losses. The challenge is to combine attractive bond yields without being exposed to the risk arising from interest rate movements,” Le Saout said.