Atlantic House Investments has launched the Dynamic Duration Fund.
The new fixed income strategy is designed to perform in both inflationary and deflationary environments by ‘systematically pivoting’ between investing in conventional fixed income and exposure to inflation itself.
Deputy CIO Mark Greenwood is the lead manager. The strategy utilises three liquid instruments, namely; government bonds, interest rate swaps and inflation swaps. The will be equally applied across UK and US markets.
The fund tilts its exposure to fixed income and inflation-linked assets based on three systematic signals: inflation trends, real yields and current levels of core inflation relative to central bank policy targets.
The firm said these three signals provide an estimation of the likelihood of a future increase or decrease in UK and US interest rates and inflation, which in turn systematically determines the fund’s positioning.
Greenwood commented: “The Atlantic House Dynamic Duration Fund is a strategy designed for investors seeking the diversification from equities that they might have looked to conventional bond funds to provide.
“The duration exposure of such funds can create substantial risks in an environment of changing interest rates as it is notoriously difficult for fund managers to navigate these shifting currents.
“However, the systematic approach applied by this new strategy offers the potential for performance in both inflationary and deflationary environments by tilting dynamically to fixed income or inflation assets.”
CEO Tom May said: “Choosing how much duration to own in a multi-asset portfolio is both highly-challenging and highly-important. This new strategy introduces a systematic approach to this. We believe that multi-asset investors can use it alongside more traditional fixed income exposures to better diversify portfolios and enhance returns during periods when the inflationary environment is changing rapidly.”
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Sponsors include Goldman Sachs Asset Management, J Sarfra Sarasin, Munich & Co, Oldfield Partners, Premier Miton, Trium Capital and SVM Asset Management.