Prominent asset managers have unveiled several new bond strategies this week – coincidentally the same week that the European Fund and Asset Management Association (Efama) said bond funds were the most popular asset class worldwide.
Efama’s latest international statistical release shows bond funds saw net inflows – albeit at a reduced level – of €7 billion in the third quarter last year. Meanwhile, equity funds suffered net outflows of €79 billion, compared to net inflows of €16 billion in the previous quarter.
Bond funds proved popular even though investment fund assets as a whole declined by 4.7% to €18.58 trillion at the end of September. Investment funds lost €104 billion during this time, compared with net inflows of €147 billion previously.
Several asset managers have launched new bond strategies in recent weeks, or have revealed plans to do so.
Alcentra, for example, plans a closed-ended investment company investing in the secured loans and high yield debt of European or North American corporates.
Fund raising for the Alcentra European Floating Rate Income Fund will close in February. If the launch goes ahead, the Guernsey investment company will be listed on the London Stock Exchange.
It will hold at least 80% of its net asset value in senior secured, floating rate debt. Secured subordinated debt will account for no more than 20%, while the allocation to unsecured floating rate or secured or unsecured fixed rate high yield bonds will be limited to 15%.
On the open-ended side, AllianceBernstein has launched a bond fund investing in sub-investment grade bonds. The strategy will concentrate on higher quality issuers excluding CCC and lower ratings and use hedging techniques to help manage risk.
AllianceBernstein says the portfolio is designed to deliver high-yield like returns but with a lower risk profile because it invests in shorter duration bonds.
More recent data, however, suggests the bond fund rally is not going to be a long one, at least not in Europe.
Lipper, which has also published fund flow statistics today, says bond funds in Europe suffered outflows of €13.6 billion in November because investors withdrew from both global bonds and high yield products.
The European funds industry as a whole saw outflows of €9 billion in November. Nevertheless, it was the best result for six months owing to inflows of €18.3 billion into money market funds.
©2012 funds europe
