UK- Investment manager Friends Ivory & Sime (FIS) has announced the launch of two new corporate bond funds. The All-Stocks fund will aim to outperform Merrill Lynch’s All-Stocks Sterling corporate bond index by 1% per annum measured over rolling 3 year periods while the Long-Dated fund will seek to outperform the Merrill Lynch +15 Year Sterling corporate bond index by the same margin. Head of fixed income Philip Hunt is leading a team of eight who will manage the funds.
FIS is launching the two following increased demand from its clients. Says Hunt: "a number of pension funds, particularly mature funds, have shifted their asset allocation away from equities towards bonds. Introducing these funds now allows us to meet our clients' needs by using our existing expertise in fixed income securities."
He adds that low interest rates and a corporate bond market that continues to grow year on year have both made investing in the category more appealing. Legislative changes including the accounting standard FRS 17 and valuation rules have made corporates more attractive as a means of matching assets and liabilities.
FIS has run corporate bonds but typically within other mixed bond funds. “What we are creating is a specific set of corporate bond funds,” says Hunt.
The launch follows a recent agreement between index manager State Street Global Advisors and FIS to team up and supply index-tracking funds with an SRI overlay.
Friends Ivory & Sime manages £34.8 billion in assets.