Kames Capital has launched two absolute return bond funds aimed at providing investors with positive returns whatever the market conditions.
The Kames Absolute Return Bond Global Fund and the Kames Absolute Return Bond Constrained Fund are available to both institutional and retail investors.
The launch of the new funds follows Kames’ decision to stop actively marketing its Kames Absolute Return Bond Fund in February this year due to capacity constraints, as it nears the £2 billion assets under management mark through its current pipeline. This fund’s popularity was due to it producing a positive return in 32 months out of 43.
The new funds will provide investors with a similar strategy to the existing fund with both aiming to generate low risk positive absolute returns over a rolling three year period irrespective of market conditions.
The Kames Absolute Return Bond Global Fund aims to outperform the three month GBP Libor by 2.5 per cent a year net of fees over a 36 month rolling period, whilst the Kames Absolute Return Bond Constrained Fund aims to outperform the one month Euribor by 1 per cent a year net of fees over a rolling 36 month period.
The global fund will be co-managed by John McNeill, Sandra Holdsworth, Nicholas Chatters and Paul Dilworth, while the constrained fund will be co-managed by Euan McNeil and James Lynch, supported by Paul Dilworth. Both funds will receive input from across Kames’ 27-strong multi-award winning fixed income team.
The new funds are domiciled in Ireland and available in sterling, euro, Swiss franc and US dollar share classes. The base currency for the global fund will be sterling and for the constrained fund it will be euros.
Kames chief investment officer Stephen Jones, says: ‘These latest additions to our growing absolute return franchise are aimed at the low risk end of both the professional retail and institutional markets, where investors are looking for positive returns regardless of the market conditions. We have seen significant interest in this area of the market with the success of our Kames Absolute Return Bond Fund. This fund has experienced significant asset growth over the past 12 months and with its pipeline we expect its size to settle at around the GBP2 billion mark very soon. However, due to the fund’s structure we have potential capacity constraints when it breaches this figure, hence the reason we have stopped actively marketing it. In response to client demand, we have launched these new funds that share many similarities with the Kames Absolute Return Bond Fund.
‘We are seeing a lot of demand for this type of fund from retail and institutional clients. Pension plans for example are using absolute return bond funds in various ways, particularly as the LIBOR generator alongside their LDI strategies. The new global fund is well positioned to meet this demand.
‘The new funds, managed by a highly experienced team, will also benefit from the support and ideas of our highly experienced and award winning wider fixed income team headed by David Roberts.’
