Assets in the Old Mutual Absolute Return Government Bond Strategy, managed by Russ Oxley and his team, have exceeded GBP500 million (US$D55m)m just two months after launch
Oxley says: “I am delighted that our six-strong team have got off to such a strong start at Old Mutual Global Investors. It is also very pleasing to have received over GBP500 million of assets in such a short period of time as this demonstrates that investors continue to support our strategy. We now look forward to building on our successful three and half years managing this type of strategy.”
Donald Pepper, Managing Director of Alternatives at Old Mutual Global Investors, adds: “We are very happy with the response of the market to the launch of our new liquid alternatives strategy and the range of clients that have invested. Indeed, our expectations have been surpassed. It is pleasing to see that nearly a quarter of the AUM has been attracted into the higher volatility-higher expected return onshore EU hedge fund (QIAIF) version. We have a large number of prospective clients who are at advanced stages of due diligence on the strategy and we expect to see continued strong inflows over the coming weeks and months.”
Russ Oxley and the Rates and LDI team joined Old Mutual Global Investors from Ignis Asset Management earlier this year. Russ, the Lead Manager of the Strategy, and Co-Managers Adam Purzitsky and Paul Shanta, are supported in their portfolio management and trading by Huw Davies and Jin Wong, and in systems development by Josh Heming.
The objective of the Strategy is to seek to deliver positive total returns on a rolling 12-month basis, with stable levels of volatility, uncorrelated to bond and equity market conditions. The UCITS fund is managed to a volatility target of 4 -6 per cent, with expected annualised returns of cash plus 5 per cent. The QIAIF, which also provides Investors with Daily Liquidity, is managed to a volatility target of 7-9 per cent, with expected annualised returns of Cash +8 per cent. The Strategy aims to be diversified from global fixed income markets by employing a highly distinctive investment strategy focused on expressing views on macro themes through exposure to forward interest rates, inflation expectations and foreign exchange in developed markets.
The low correlation of the strategy with global bond markets is likely to be appealing at a time when the traditional safe-haven role of government bond markets is increasingly questionable. Due to the distinctive process and avoidance of credit and credit-like assets, and of emerging market debt the strategy is also expected to exhibit low correlation with other absolute return investment strategies (including global macro hedge funds, fixed income, equity and multi-asset based strategies), making it a potentially attractive addition to a portfolio. The portfolio managers will place a strong emphasis on investing in highly liquid assets, in which the market has historically remained liquid, even in the most extreme periods, including for example the global financial crisis.
