Ignis Asset Management is set to launch its absolute return government bond fund by the end of March, it said in a statement today.
The fund will primarily invest in AAA supranational and developed market sovereign bonds and will be managed by the head of rates – Russ Oxley and Stuart Thomson – Chief Economist.
The funds foreign currency exposure will be limited to 25 percent and the fund managers can take long and short positions in derivatives and money market instruments.
The fund – domiciled in Luxembourg and categorized as an UCITS III SICAV will aim to keep volatility low by diversification and targets to achieve net returns of 2 to 3 percent in excess of cash annually.
The Ignis team has developed a method through which it reconstructs the developed market government securities yield curve from discrete forward rates. Managers then take appropriate long and short positions to exploit the pricing anomalies by targeting specific forward rates.