UK-based Thames River Capital – the recently acquired funds arm of F&C Group – is preparing to launch a UCITS III-compliant absolute return high yield bond fund in May to be
UK-based Thames River Capital – the recently acquired funds arm of F&C Group – is preparing to launch a UCITS III-compliant absolute return high yield bond fund in May to be managed by its global credit team reported FT Adviser this week. Stephen Drew (pictured) and Mehrdad Noorani currently head up the team. The fund is expected to be composed of a basket of around 50 credit positions with Drew stating that approximately 80 per cent of the fund would be invested in high yield bonds, the remaining 20 per cent targeting investment grade bonds. Drew added that he expected 70 per cent of the fund to be weighted towards developed markets, 30 per cent to emerging markets. The global credit team will use a bottom-up approach to select relevant credit instruments, and as you’d expect with a UCITS III-compliant fund, emphasis will be placed on bonds with good liquidity provisions. A global mandate will be used and will avoid exposure to single issuers. Overall credit quality is expected to lie within the B-/BBB range. Annualized target returns will be 10 per cent, with a similar 10 to 12 per cent target volatility. Regarding the upcoming launch, Drew was quoted as saying: "We see substantial implied value in high yield credit spreads and this underpins our belief that this is the ideal time to launch a fund with this remit.” The fund is a Dublin-domiciled OEIC. Minimum investment is GBP10,000.
