Ignis Asset Management is to launch the Ignis Absolute Return Government Bond Fund at the end of March. The fund will target net returns of 2% to 3% per annum in excess of cash2 by actively trading a portfolio of global government bonds and currencies.
The Ignis Absolute Return Government Bond Fund will be managed by Head of Rates, Russ Oxley, and Chief Economist, Stuart Thomson, and will be the first retail proposition from Ignis’s Rates Team, which manages in excess of GBP28 billion on behalf of institutional investors.
For the first time, retail investors will be able to access Ignis’s successful rates process. Whilst the majority of bond funds follow a duration based process and / or take corporate credit risk, the Ignis Rates Team uses an internally proven method that breaks down developed country government yield curves into discrete forward rates, giving the managers a far greater insight and level of information than the typical bond fund manager. Breaking down yield curves allows Russ and Stuart to target specific forward rates and enables the managers to exploit pricing anomalies more accurately, through long and short positions.
The fund, a Luxembourg-domiciled UCITS III SICAV, will invest primarily in government bonds, but will also take long and short positions in money market instruments and derivatives. Foreign currency exposure – managed using Ignis’ rigorous FX process – will be limited to 25%.
Unusually for an absolute return fund, the annual management charge will be only 1%, with a 10% fee on performance in excess of a cash hurdle rate, as measured by the Sterling Overnight Index Average (SONIA).
Jonathan Polin (pictured), Sales and Marketing Director at Ignis, says: “With investors increasingly concerned about the future direction of global markets, we think there will be strong appetite for a fund that is able to achieve attractive cash-plus returns in all market conditions with a lower volatility than both the market and other absolute return funds. As an absolute return vehicle, this fund will also provide returns lowly correlated to traditional equity and bond funds and if rates rise, should provide an effective hedge against inflation."