EUROPE - F&C Asset Management has launched a euro-denominated inflation-linked bond fund aimed at pension funds and insurance companies struggling with liabilities.

It said the Luxembourg-domiciled F&C Portfolios Euro Inflation Linked Bond Fund will be managed by Lionel Oster. It will invest in inflation-linked European government, corporate and supranational debt. The fund may also invest 20% of its portfolio in conventional European government bonds.

“Oster's objective is to generate a combination of capital growth and income and performance will be benchmarked against the Barclays Euro Inflation-Linked All Maturities index,” said the company in a statement.

“F&C believes the market for inflation-linked bonds will grow substantially over the next few years as liability matching becomes an increasingly high priority for pension funds and insurance companies in the wake of falling equities, ageing populations and industry regulatory requirements,” it added.

“F&C also considers that the asset class will benefit from increased liquidity in the coming year due to increased issuance from European governments as well as the expected entry of several new participants, such as Germany and Switzerland.”

"F&C is recognised as a leading active manager of inflation-linked bonds,” said Patrick Johns, head of UK institutional business.

“This year we have been awarded in excess of €400m from a variety of European investors, including large institutional investors in Switzerland and France, and BVP in Austria."

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