Royal London Asset Management launches Absolute Return Government Bond Fund
4 December 2014
Royal London Asset Management (RLAM) is today launching an Absolute Return Government Bond Fund. The Fund, a UCITS-compliant OEIC, is aimed at investors seeking absolute returns from the highly liquid G10 government bond markets.
The Fund seeks to exploit opportunities in valuations across government bond markets, utilising a robust investment process. It invests in government bonds and associated derivatives from across G10 member countries and targets absolute positive capital growth over a 12 month rolling period. It is managed by Darren Bustin, Head of Derivatives and Paul Rayner, Head of Government Bonds who have over 40 years’ combined experience. The co-managers work on a collegiate basis with RLAM’s broader Fixed Interest and Derivatives teams.
The Fund will take long-term strategic positions that reflect the managers’ views on global economic themes affecting bond markets. The managers will also seek to exploit shorter-term tactical opportunities that may arise. The combination of both strategic and tactical approaches to investing is aimed at enabling the fund to achieve positive returns whilst also reducing volatility.
Why absolute return now?
Government bond yields have fallen to record lows in 2014, a year where sluggish growth, low inflation and heightened geopolitical risks were unexpected and led to an increase in market volatility. RLAM’s view for the next three years is a gradual rehabilitation and a move to more neutral interest rates and bond yields.
An absolute return fund with the ability to have both long and short positions has the potential to benefit from increased volatility. The managers will enhance their long term strategic view with tactical positioning across G10 government bond markets, and utilise a rigorous risk management process - with the aim of providing long term consistent returns, irrespective of market conditions.
Rob Williams, RLAM’s Head of Distribution commented:
“Government bonds will remain an important asset class for institutional and wholesale investors alike over the long term. The launch of this fund completes RLAM’s full-spectrum sovereign bond offering, which includes international exposure and long-only, short duration and now absolute return approaches.”
“Both Darren and Paul have considerable experience within their respective fields and we feel that their combined expertise and long tenure with RLAM present a compelling proposition that is quite unique to the industry at the moment. We believe this style of investing will become a growth area, and are excited to bring a capability previously offered only to our institutional clients to the broader market. ”
Darren Bustin said:
“Paul and I bring together a diverse range of skills that can be used to produce positive absolute return with low volatility. By understanding what is behind long term government bond valuations we can exploit opportunities through the use of strategic positioning. However, recognising that bond markets can be inefficient in the short term we can also invest tactically to add incremental returns and reduce volatility.”
Paul Rayner said:
“RLAM have been running segregated absolute return mandates over the last four years with great success. This fund is a natural step in developing our capability. The team has been working together for over four years and we believe our investment philosophy and process, together with our risk management controls, provide a robust framework as we endeavour to deliver positive performance with low volatility.”
Notes to Editors
- The fund is a UCITS compliant OEIC and is domiciled in Dublin; it sits in the IMA Targeted Absolute Return sector.
- The G10 economies are: Belgium, Canada, France, Germany, Italy, Japan, Netherlands, Sweden, Switzerland, United Kingdom and the United States.
For further information please contact:
0207 015 2525
About Royal London:
Royal London is the largest mutual life, pensions and investment company in the UK with Group funds under management of £78.4 billion. Group businesses serve around 5.3 million customers and employ 2,823 people (figures quoted are as at 30 September 2014).
The Group is currently moving all of it UK life, pension and investment businesses under a new version of the Royal London brand. The Group's independent wrap platform will remain branded Ascentric.