Royal London Asset Management launches buy & maintain credit fund with Volvo Corporate Trustee Limited client mandate
1 July 2015
Royal London Asset Management (RLAM) announces the launch of the Royal London Buy & Maintain Credit Pooled Pension Fund (RLPPC Buy & Maintain Credit Fund), with an initial investment from existing client Volvo Corporate Trustee Limited.
RLAM has been offering buy & maintain fixed income solutions since 2011 and now manages over £2.5 billion in the strategy for a range of pension clients. The new fund is based on the existing buy & maintain strategy, now extended to offer a pooled solution for pension fund clients looking to gain exposure to attractive credit bond assets. The new fund looks to minimise the frequency and impact of defaults whilst targeting an attractive risk adjusted yield.
The fund will be managed by Shalin Shah, who joined RLAM in 2008 and has worked closely on the development and management of a number of segregated buy & maintain credit strategies. He will be supported by the 17-strong fixed income team at RLAM.
The fund aims to deliver robust long-term cash flows for pension funds, which benefit from the matching nature of the asset class. The fund will invest in a diversified portfolio of predominantly Sterling denominated investment grade debt, with a bias towards bonds that offer genuine and protective credit enhancements. The fund’s sector and stock selection is based on an assessment of fundamental risk and return, with a particular focus on covenants, security and structure. It seeks to take advantage of long-standing inefficiencies within credit markets, enabling long-term investors to capitalise on attractive credit spreads, whilst maintaining a sensible level of risk. The fund will have exposure to global issuers, with a preference for issuances under English law, which provides robust protection for secured bond holders. The portfolio will be actively constructed and monitored, but will remain with a lower turnover than typical benchmark based active strategies.
Fund manager Shalin Shah commented:
“Exploiting the inefficiencies in credit markets is central to RLAM’s investment process and philosophy and our buy & maintain strategy makes this relevant to the needs of pension schemes. The new fund builds on the success of our current buy & maintain client mandates and creates a solution suited to the needs of other, potentially smaller, pension schemes.”
A spokesperson for Volvo Corporate Trustee Limited commented:
“We decided to invest into RLAM’s pooled buy & maintain credit fund following our positive experience with our existing segregated buy & maintain mandate, which has fulfilled our investment objectives. The pooled fund will enable our smaller scheme to achieve similar investment targets as our larger scheme.”
For further information please contact:
Mona Patel 0207 015 2525/ 07919171964
Note to editors:
The annual management charge the new fund is of 20bps per annum and the minimum initial investment is of £5 million.
About Royal London:
Royal London is the largest mutual life, pensions and investment company in the UK, with Group funds under management of £86.3 billion. Group businesses serve around 5.3 million policy holders and employ 2,859 people. (Figures quoted are as at 31 March 2015).
The Group is currently moving all of its UK businesses under a new version of the Royal London brand. The Group's independent wrap platform will remain branded Ascentric.
About Royal London Asset Management (RLAM):
Established in 1988, Royal London Asset Management (RLAM) is one of the UK's leading fund management companies, providing investment management solutions to both wholesale and institutional clients such as not-for-profit organisations, local authorities and the insurance sector.
RLAM manages over £86.3bn of assets and employs 73 investment professionals. It invests in all major asset classes including UK and overseas equities, government bonds, investment grade and high yield corporate bonds, property and cash.