Julius Baer, in partnership with Sydney-based Aurora Funds Management, is tapping into the Australian wholesale market with an absolute return fund
Julius Baer, in partnership with Sydney-based Aurora Funds Management, is tapping into the Australian wholesale market with an absolute return fund.
The Swiss wealth manager is making its first entry into the Australian market with an innovative Fixed Income fund, Aurora Absolute Return Fund.
Aurora Absolute Return Fund (AARF) offers an unlevered long/short strategy with access to the global fixed income markets. It aims at delivering positive absolute returns over the medium term by actively managing yield curve, duration, currency, sector and credit allocations.
AARF is being managed by the same team at Julius Baer Investments Limited in London (JBIL), which has successfully been managing single strategy fixed income hedge funds since 2002.
Ronny Beck, Director of Business Development at JBIL, said that the current investment climate makes investing in fixed interest a compelling proposition. He said: ‘The Australian stock market is offering fabulous returns but investors must question whether it can continue in the way that it has. It might be time to look at reducing the equity proportion in Australian portfolios and consider the risk of rising interest rates’.
‘Internationally, some European countries and the United Kingdom have been favouring an increased holding in bonds for some time. But because many national markets have been too small to handle these flows, funds have had to go into international fixed interest markets. I foresee a similar situation coming up in Australia because the Australian debt market is limited’.
‘We believe diversifying fixed-interest investments internationally makes sense. In the light of increasing demand for non-traditional investment concepts and based on its experience of managing single strategy fixed income hedge funds, Julius Baer can offer absolute return solutions for fixed income investments’.
AARF is an unlisted Australian Resident Unit Trust, mirroring the strategy in the EUR-denominated Julius Baer Multibond – Absolute Return Bond Fund (JBARBF), which is also managed by JBIL. This fund is a Luxemburg SICAV Ucits III, launched in April 2004, with AUM as of 31 March 2006, of c. EUR 3.1bn.
JBIL, which acts as investment manager to AARF, is wholly owned by Julius Baer Holdings, and manages a total of c. AUD 14.3bn of fixed income assets across traditional global long only, absolute return portfolios and single strategy fixed income hedge funds. Julius Baer is Switzerland’s largest pure wealth manager with AUSD 320 billion assets under management globally as of 31 December, 2005. The group offers wealth management and investment solutions for private and institutional clients around the world.
Aurora Funds Management, a specialist investment management and distribution group provides the infrastructure and administration for this Australian domiciled fund. Shed Enterprises acts as distribution agent.
Richard Matthews, Director of Aurora Funds Management said that the fund is aimed at investors looking for asset diversification and low volatility through global exposure to bonds. ‘Absolute return concepts aim at generating positive returns independent of prevailing market environments, benefiting from the ability to short markets. As a result, investments by Julius Baer are being managed without orientating on benchmarks, but with the objective of maximising returns,’ he said.
Matthews added: ‘We will offer this fund to the wholesale market initially and will definitely consider it for retail distribution, at a later stage’.
Background note: Julius Baer Investments Limited, London (JBIL), focuses on fixed income management. JBIL focuses on both relative and absolute return management and offers products across the entire risk spectrum.Total AUM is USD 11 bn broken down into three areas: long only/ traditional (USD 4.5 bn); hedge funds (USD 2.7bn); Absolute Return (USD 4bn)
