Global fixed interest fund launched

Aurora Funds Management has released an absolute return fund to provide investors with access to the global fixed income markets.

Although the Aurora Absolute Return Fund is currently only available to institutional investors, Aurora director Richard Matthews said it was likely it would be made available to retail clients within the next 12 months.

Matthews said the fund would suit investors who were looking for asset diversification and low volatility through exposure via global bonds using a long-short unlevered strategy.

The fund will be managed by the London-based fixed income team of Julius Baer Investments.

Julius Baer first vice-president Ronny Beck said the fund would invest in a range of asset classes including yield enhanced assets such as corporate bonds and emerging markets debt, and derivative instruments such as credit default swaps, on top of core holding of government bonds and cash.

“What we’ve tried to do is generate positive absolute returns over the medium term by actively managing yield curve, duration, currency, sector and credit allocations,” he said.

Beck said the fund had a performance target of between two and three per cent above the three-month bank bill swap rate, which was approximately the same as the cash rate. Risk will be managed according to total value at risk, with a maximum of 2.5 per cent per month set as the limit.

However, Beck noted that when the product is released to retail investors, the risk tolerance may be increased as retail investors typically had a larger appetite for risk than institutional investors.