A Dublin-domiciled high yield bond fund will be launched in May to complement the strategic bond fund already run by Harvey.
Robin Minter-Kemp, director of investment funds at Cazenove Capital, said: "Peter has built his experience on the cross-over credit strategic bond fund and with the low growth environment and demand for income it is clear we have clients looking for a more unconstrained strategy, which we are about to embrace with a high yield strategy."
The firm said generally its fund managers run two models (or funds with different strategies) each and very rarely run three.
Harvey only runs one model at the moment and he feels very comfortable taking on another, Minter-Kemp added.
The fund is being domiciled in Dublin because clients that have expressed interest in the strategy like the idea of income paying out in gross.
It will be benchmarked against the Bank of America Merrill Lynch High Yield Index, but the fund will stick to investing in UK and European issuers only and hedging it back into sterling.
The plan is for the fund to have longer duration than the Harvey’s strategic bond fund typically has because Cazenove believes the high yield market still has some way to go.
"It’s quite clear that corporates have been rebuilding cash on balance sheets for quite a long time and that affects most of the cap range. It is bizarre that less than five years ago people looked to sovereign wealth for safety and corporate for risk and now it’s the other way around. Although that extends into non-investment grade to a lesser extent than investment grade, it is a consideration," said Minter-Kemp.
The firm expects seed money for the fund to come from people who know Harvey and like his approach and track record and thinks the wealth management community in particular will have an appetite for the strategy.
Harvey joined Cazenove in 2005 and already looks after the Strategic Debt Fund and Strategic Bond Fund.
The £710m fund had top quartile performance in 2007, second quartile in 2008 and 2009 and fourth quartile in 2010 and 2011.
So far this year it is in the second quartile, with returns of 5.3% (as at 31 March).
