Nomura Asset Management launched its first mutual fund offering European investors access to the corporate hybrid bond asset class.
The Nomura Funds Ireland – Corporate Hybrid Bond Fund provides investors with a portfolio of bonds from “high-quality issuers”, offering yield levels comparable to those of high-yield bonds.
The fund will be managed by Julian Marks, head of corporate hybrid bonds, and his investment team of analysts and portfolio managers responsible for analysing issuers and individual bonds on a fundamental and ESG basis.
The result of their multi-layered process is a concentrated portfolio of 30 to 40 issuers, about half of which are substantially overweighted, said the asset manager.
Reaching €194 billion recently, the corporate hybrid bond market continues to grow, and the firm attributed this to issuers seeking to optimise their capital structures, support their credit ratings and minimise their weighted average cost of capital by issuing these bonds.
For investors, these bonds are attractive, with an average yield of more than 8 % per annum in euros, highlighted the asset manager.
Marks commented: “We believe this is a favourable time to invest in corporate hybrid bonds because the risk premiums are, on average, over 100 basis points above what we consider fair value. There is potential for price gains, and furthermore, certain issuers are significantly mispriced, creating opportunities for active managers to generate added value for investors.”
© 2023 funds europe
