JP Morgan AM’s Euro Inflation Linked Bond fund will invest in eurozone debt as it targets investors looking to hedge their exposure to inflation liabilities.
The fund is co-managed by David Tan, head of global rates and Roger Hallam, a member of his global rates team.
The euro-denominated Sicav is domiciled in Luxembourg and is invested in the debt of core European states Germany, France and Italy.
With the eurozone inflation reading for July at 2.5% and with the flash estimate for August sitting at the same level, the topic of inflation is set to remain high on investors’ agenda.
Nick Gartside, international CIO of fixed income at the group, said: “Globally, inflation could well fall, but inflation linked bonds can still perform well in that environment.”
So far the fund has €3.46m euro under management and is available to retail and institutional investors.
Gartside said it was intended to complement the fixed interest range already offered by the group.
“The benchmark of this fund is one to 10 years and an issue with normal inflation linked bond funds is that they tend to be for a longer duration.”
He added that the shorter duration should allow the team to benefit from higher volatility in the region.
Buying only investment grade bonds from core eurozone nations will keep risk down, Gartside explained, as Greece is the only peripheral nation to issue index-linked debt and is sub-investment grade.
Gartside joined JP Morgan AM from Schroders’ fixed income team last year as the group looked to improve its standing in that area.
