Pencilled in to launch towards the end of this year, Eaton Vance Ireland Floating-Rate Income Fund will replicate the Cayman vehicle, Floating-Rate Fund, headed by Scott Page.
Eaton Vance is one of the pioneers in this asset class, having invested across loans since 1989.
Floating-rate loans typically perform with low correlation to traditional fixed income and equity markets – historically the asset class has also performed well in rising interest rate environments because their coupons frequently reset.
The main hunting ground for managers is the US loans market; the new fund is likely to have 80% plus in this market, with the balance in European issues.
“We are not bringing European loans to European investors, but bringing global loans to European investors,” said Page.
“It’s an asset class for investors who feel forced into buying risk, and buying corporate credit even though it scares people. We offer a stability seeking approach to US loans.”
In terms of credit quality, the majority of the existing Cayman fund is split between BB and B-rated credit.
“We’re not here to deliver alpha; our alpha is beta, its stability,” added Page.
“It’s about having the confidence to not introduce any unnecessary risk. We are not creating a new asset class, but a new thought process. Stability is more important than eye-popping returns.”
Floating rate loans have garnered much interest from wealth managers this year. Also this month, M&G launched Global Floating Rate High Yield Fund for James Tomlins.
