Aberdeen Standard unveils short duration credit fund

Aberdeen Standard Investments has launched a global short duration corporate bond fund to counter the effect of rising interest rates on fixed income portfolios.

The asset manager said the fund aims to reduce interest rate risk by investing in corporate bonds with maturities between one and five years and delivering lower exposure to interest rate risk than the wider global corporate bond universe.

It comes after the Bank of England’s Monetary Policy Committee announced a 25 basis point increase in the base rate, from 0.25% to 0.5%. It is the bank’s first rate hike for more than a decade.

Asset managers have previously warned that an increase in rates stands to lower bond prices and investors have been wary of locking into such low yields for long periods.

The Global Short Duration Corporate Bond Fund is a Luxembourg Sicav and will be managed by a team comprising Craig MacDonald, Samantha Lamb (pictured) Jon Curran and Chris Heckscher.

Aberdeen Standard Investments claimed the portfolio will be “genuinely global” with the team adopting bottom-up analysis across global credit.

The fund has an annual management charge of 0.25% and will be benchmarked against the Barclays Global Aggregate Corporate 1-5 Index ex-subordinated (FX-hedged).

The average credit rating in the portfolio is BBB with a minimum of 90% of the portfolio holding this rating. The lowest credit rating in the portfolio is B- (maximum exposure of 10%) including off benchmark high-yield securities.

Eight of the fund’s top 10 holdings are financial stocks.

Lamb said: “Fundamental credit research and conviction views on companies are critical to our alpha generation. By investing primarily in short-maturity bonds, the Global Short Duration Corporate Bond Fund is an option for investors concerned about interest-rate risk who continue to seek value from credit spreads and active management across a global credit opportunity set.”

 

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