The fund is managed jointly by Jonathan Gibbs and Adam Skerry, respectively, head of real returns and investment director, at SLI and aims to generate “real returns” by investing primarily in a “global portfolio of short duration bonds”.
The fund will invest primarily in index-linked bonds with maturities up to 10 years, but has some flexibility to invest outside its benchmark, but portfolio duration is limited to plus minus two years, relative to the benchmark, SLI said.
According to Gibbs, “Global inflation portfolios have provided attractive returns and strong diversification qualities for many years. This new offering allows investors to access this diversification, and the global opportunity set, with a lower exposure to duration risk. It will use the same toolkit as our existing products, and broadens the choice available for our investors.”
Asked where the fund will focus, given the disparate interest rate regimes visible at the moment, SLI told Portfolio Adviser that, while the fund is dominated by the US and UK, in line with global market size, SLI said, “the crucial concept for a global inflation fund is that a global portfolio, hedged to domestic currency, is an effective domestic inflation linked asset. Over the cycle, inflation differentials and FX carry should offset one another.”
The fund has an OCF of 1.12 for retail investors, as well as a 4% initial charge, while for institutional investors, there is an OCF of 0.62%.
