Baring Asset Management's Baring Directional Global Bond Trust has attracted GBP 100 million from investors since launching on 12 March.
To the end of November, the fund has returned 6.2% in Sterling terms, putting it firmly on track to meet the target of 4% above 3-month Sterling LIBOR after charges - approximately 8.8% a year at current interest rates.
The fund was launched to take advantage of new UCITS III legislation, offering UK investors an actively run, absolute return global bond fund with more flexibility than traditional long only products. The fund has the potential to make money out of bond and currency movements whether they are rising or falling and uses BAM's expertise in judging bond, interest rate and currency movements to deliver positive returns in any market environment.
Colin Harte, manager of the fund, said: "The current positioning of the fund includes a short in the New Zealand dollar in favour of the Australian dollar, and a long position in the Japanese yen against the Euro and Swiss franc in anticipation of a rebound. Although the US dollar probably has further to fall over the medium to long term, the balance of risks has shifted, so we have closed our US dollar short position for now."
"Having been short US Treasuries for much of November, we currently have zero duration in the fund. Both currency and duration risk are managed tactically, changing with our assessment of the short term prospects for the markets. We invest where the opportunities look most attractive and where we have most conviction, and right now that's in the currency markets."
Ian Pascal, Marketing Director, adds: "We were one of the first companies off the blocks to use UCITS III regulations to offer investors more flexibility, and it's gratifying to see that demand for the Directional fund has been even stronger than we had hoped."
BAM has recently launched Dollar and Euro denominated versions of the fund. These are based in Dublin and aim to return 4% over three month Dollar and Euro cash rates.
Changes at Baring Asset Management
Baring Asset Management manages money on behalf of governments, institutions, charities, private clients and mutual fund investors. On 22 November, ING announced the sale of the two businesses of Baring Asset Management Holdings.
The asset management activities of Baring Asset Management (BAM) are being acquired by Massachusetts Mutual Life Insurance Company (MassMutual). MassMutual is a diversified financial services business with one of the largest life insurance businesses in the US and an existing asset management business of USD 285 billion. Their current asset management business is US focused in terms of products, clients and distribution and is viewed as complementary to BAM's international distribution strengths.
The Barings Financial Services Group (FSG) is being acquired by Northern Trust. Northern Trust has two core businesses - Institutional Services that delivers global custody and fund administration to institutions and Personal Financial Services providing banking and trust services to affluent individuals.