Old Mutual Global Investors is planning to establish the Old Mutual Monthly Income High Yield Bond Fund by the summer of 2014.
The fund, currently subject to regulation, is intended at attaining total return from a diversified portfolio comprising of primarily fixed and variable rate debt securities.
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Old Mutual Global Investors head of Fixed Income Christine Johnson said that the company remains positive to launch a product that would meet the continuing need of its clients to access income streams.
"As bank lending continues to contract, there is an increasing supply of good quality, higher yielding issues. The issuing companies are typically from continental – and particularly southern – Europe, long established, with good free cash flows, healthy balance sheets and credible growth prospects," added Johnson.
To be managed by Christine Johnson and Bastian Wagner, the fund will work to gain higher corporate bonds to earn the company a steady income stream.
The managing team of specialists in high yield, financials and investment grade credit, macro strategists and portfolio managers are given an annual yield of 6%-7% at the launch of the fund. The fund’s duration is set to about 3 to 9 years.
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By GlobalDataOld Mutual Global Investors portfolio manager Fixed Income Bastian Wagner said: "Around a third of the market comprises of issues below 350m and we believe that this part of the market represents a particularly attractive opportunity. Companies issuing in this area are in many cases new to the bond market and issues under 350m are too small to be investible by the mega-funds. For these reasons, they will often offer somewhat better terms to those in the broader market."
