GLOBAL - Danish fund manager Sparinvest is to target European pension schemes with a bond fund that exposes mispricing.
Jan Stig Rasmussen, chief executive of the company's Luxembourg business, said: "We're effectively copying what we do with value equities - looking at different companies using a credit analysis approach.
"What we do is calculate intrinsic value and compare it with the market price. If there is mispricing, we'll typically buy the company and wait until pricing is where it should be, then sell it on."
The vehicle, a Luxembourg-based SICAV, is a joint venture with US asset manager Brandes.
Under the agreement, Brandes will select bond issuers in the US, and Sparinvest will select issuers in Europe, Asia and other emerging markets.
The vehicle is expected to hold 80-120 bonds, with an initial portfolio weighted toward European banks and US residential developers.
"We've already had success in the high-yield market using this methodology," Rasmussen said.
"We've combined bond and equity skills for a number of years, but there are not many other investment managers doing what we do.
"Typically, bond managers - in contrast to equity managers - are not used to performing corporate analysis."
The Danish fund manager - which is part owned by Danish pension schemes expected to be among investors in the fund - launched its first value bonds funds in 2005.
The vehicle will target pension funds and family offices with investment horizons of at least 2-5 years.
"It can take time until bonds reach their true value," Rasmussen said.
According to Sparinvest, investing in the fund will allow fixed-income managers to pass on responsibility for choosing geographic regions, or between investment grade and high-yield bonds.
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