TwentyFour Asset management is set to launch an Absolute Return Credit fund next month for ex-Ignis head of credit Chris Bowie.
The Luxembourg-domiciled Sicav will target an annual return of Libor plus 250 basis points after fees, according to a document seen by Investment Adviser on TwentyFour’s website.
The flyer document for the fund, which has since been removed, said the fund was designed to “embrace well-rewarded risks such as credit risk, but reduce less rewarded risks such as interest rate risk”, resulting in an expected volatility of less than 3 per cent.
It will have an ongoing charge of 0.43 per cent for initial seed investors, rising to 0.58 per cent.
TwentyFour has had plans to launch an absolute return fund for Mr Bowie since he joined the firm in September 2014.
The Absolute Return Credit fund will make use of TwentyFour’s quantitative research system “observatory” to select risk-adjusted securities.
Two-thirds of the portfolio will always be in actively managed investment grade bonds of 0-5 years duration, but in periods of “market stress” this can be increased to 100 per cent.
Meanwhile, in periods of “market calm” up to a third of the portfolio can be invested in high conviction assets to enhance returns
The document, which is prospective and subject to change, stated the fund will also use hedging techniques to provide liquidity and downside protection if the manager feels it is necessary.
In its sample portfolio, the fund has a yield of 3.7 per cent, and is 90 per cent invested in triple-B bonds.
Geographically, two-thirds of the portfolio are in UK assets, 23 per cent in Europe, and 11 per cent in the rest of the world
Mr Bowie had been at Ignis for a decade when it was bought by Standard Life Investments (SLI) last year, and had run the top-performing Ignis Corporate Bond fund since 2009.
He decided not to join SLI and was hired by bonds boutique TwentyFour, with whom he launched a Corporate Bond fund at the start of the year. Since January, the £112.5m fund has lost 0.6 per cent compared to a 1.6 per cent loss for the IA sterling Corporate Bond sector.
