Called the Morgan Stanley Investment Funds Global Buy and Hold 2020 Bond Fund, it will invest in government bonds, investment grade and high yield corporate bonds and emerging market debt, all with an expected maturity of approximately four years.
The fund will be managed by MSIM’s Global Fixed Income Team, and the lead managers of the portfolio are Jim Caron, Marco Spaltro, Leon Grenyer and Joseph Mehlman.
Caron said: “For investors seeking a stable source of income in the current climate of lower yields that is vulnerable to bouts of higher volatility, we believe this fund is very attractive because it can serve to reduce volatility and increase diversification of income in one’s portfolio.
“In the current low interest-rate environment, the search for yield from fixed income products has intensified, and this fund may provide a solution to meet the demand from investors looking for an alternative to European government bonds or other kinds of non-diversified fixed income exposure.”
MSIM said the portfolio will be constructed using a two-pillar approach, drawing upon quantitative modelling and fundamental analysis.
“These complementary approaches allow for a suitable top-down strategy while making sure that the bonds owned are robust from a bottom-up perspective, ensuring a high likelihood of reaching clients’ return targets.
“The investment approach is not tied to the benchmark, so the final portfolio is not oriented to the market.”
The fund will be available to investors in the UK, France, Spain and Italy. The base currency is the euro.
MSIM said the fund will have three distinct phases: an asset gathering period from 21 October to 9 December 2016; a principal investment period - from 2016 to 2020; and a post-investment period - from January to June 2021.