Catella, a Sweden-based independent financial advisor and asset manager, has expanded its fixed income fund range by launching a new absolute return fund that seeks to generate returns in a low interest rate environment.
Dubbed as Catella Credit Opportunity, the new fund will be managed by Magnus Nilsson and Fredrik Tauson and is expected to be launched by the end of this month.
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The fund aims to target a return of 6-8% and an expected risk level, measured as its standard deviation, of 5-7%.
It seeks to generate adequate risk-adjusted returns by investing in fixed income capital structure, and in bonds with high and low credit ratings.
Additionally, the fund will use the derivatives market to protect its capital against interest rate risk and credit risk.
Catella said that the fund’s currency exposure is hedged back to its base currency, the Swedish krona.
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By GlobalDataFredrik Tauson said: "A fund must be able to allocate to the best asset class at any given time. In addition, the fund should work with asset classes that provide capital protection in order to fend off rising market interest rates."
Magnus Nilsson said: "Record-low interest rates create an especially challenging environment for investors. Many traditional fixed income funds have overly narrow mandates and therefore less opportunity to generate returns in a low interest rate environment, and they may even provide negative returns if interest rates rise."
