The Old Mutual Monthly Income High Yield Bond Fund will aim to provide income and capital growth from a worldwide portfolio of fixed and variable rate debt securities.
The fund will be managed by head of fixed income Christine Johnson and fixed income portfolio manager Bastian Wagner.
Od Mutual said the fund will focus on higher yielding corporate bonds as a means to deliver a strong, regular income stream.
It added that the team will seek to deliver a “competitive monthly distribution” with a six to seven percent annual yield targeted at launch.
Capital enhancement and a positive total return are hoped to be achieved through the active management of credit quality and interest rate risk.
The fund will have duration limits of minus three to nine years, which the group says will enable it to take advantage of both rising and falling yield environments.
Johnson said the fund comes as a result of market demands for a product that will meet the continuing needs of clients to access income streams.
“As bank lending continues to contract, there is an increasing supply of good quality, higher yielding issues,” she said
“The issuing companies are typically from continental Europe, long established, with good free cash flows, healthy balance sheets and credible growth prospects.
“This is a liquid, diversified market.”
Wagner added that Old Mutual sees issues below €350m as a particularly attractive opportunity.
“Companies issuing in this area are in many cases new to the bond market and issues under this amount are too small to be investible by the mega-funds. For these reasons, they will often offer somewhat better terms to those in the broader market,” he said.
Prior to her role as head of fixed income, Johnson was a senior fund manager role at Halbis Capital Management and a portfolio manager at Investec Asset Management.
Wagner previously held analyst roles at Eaton Vance and WestLB Mellon Asset Management.
Based in London, Old Mutual Wealth comprises Skandia and Old Mutual Global Investors and provides wealth management solutions such as investments, pensions and life assurance.
It currently oversees £78.5bn in customer investment and has operations in the UK, Continental Europe, and various international markets.
