The future is likely to be characterised by inflation volatility, frequent changes to central bank policy and unpredictable bond markets.
In these times, investors need more diversification strategies than have traditionally been available through straightforward multi asset funds alone.
With a growing need for solutions which have a low correlation to both equities and bonds, abrdn has relaunched two funds within its unconstrained, diversified fixed income range, focussing on straightforward, liquid, and transparent areas of the market.
With name changes taking effect from 16 May 2024, the Absolute Return Global Bond Strategies Fund will become the Macro Fixed Income Fund, while The Total Return Credit fund is to become the Global Income Bond fund.
These abrdn SICAV II funds, which will be available for wholesale, retail and institutional investors in the UK and overseas (ex US), will target less correlated returns and lower drawdowns than traditional fixed income funds.
They will use strategies which abrdn believes are difficult to replicate elsewhere, with the aim to help clients grow and preserve their wealth. They are distinct from traditional fixed income funds which are managed relative to a benchmark index.
Coinciding with the name changes are simplifications to the process:
Macro fixed income fund
- New investment process to better align with key goals: diversified returns and low drawdowns. Using a diversified macro approach with strong risk controls.
- New philosophy: diversified; highly liquid with simple strategies; and resilient.
- With assets under management of over $500m, the fund already has scale
Thomas Maxwell, Investment Director, abrdn, says: “Bond markets are entering a new era, with compelling opportunities for investors seeking income and capital gains over the medium to long term. We anticipate strong opportunities being created across global fixed income markets, with inflation volatility here to stay, various central banks are likely to approach this challenge differently. I don’t believe there has ever been a better time for a flexible, unconstrained approach.
“The Macro Fixed Income Fund offers a unique solution for clients – targeting diversified returns and low drawdowns. We see excellent opportunities for this strategy going forward. As global macro volatility rises, the portfolio is well placed to capitalise on market dislocations and changing dynamics in liquid fixed income and currencies.”
Global Income Bond Fund
Coinciding with the name changes are simplifications to the process:
- A re-launch of a strategy that has been in existence since Oct 2014 with an established track record.
- Less exposure to bonds with a low credit rating within high yield with an enhanced focus on “BBB” and “BB” rated parts of the market in both developed and emerging markets.
- A simplified process by removing some of the more complex aspects of our defensive strategies and making more extensive use of credit derivatives to both enhance yield as well as to reduce risk depending on the environment.
Mark Munro, Investment Director, abrdn, says: “The Global Income Bond Fund is a relaunch of the abrdn Total Return Credit fund that has been in existence since 2014, with no change to the management team with over 27 years average experience.
“The fund gives investors access to higher yielding corporate bonds globally in both developed and emerging markets, to provide a compelling level of return and income. The fund represents our highest conviction ideas globally across our fixed income platform focussing on the ‘BBB’ and ‘BB’ rated segment of the market. This means that clients can access the now attractive yield levels on offer in fixed income but with less risk and drawdowns than investing solely in high yield markets. The fund will remain under the three existing managers and will retain its SFDR Article 8 designation.”
Ginny Richardson, Global Head of Commercial Strategy, Fixed Income, says: “We are excited about the prospects for both of these re-launched products and indeed to continue to build momentum behind our range of outcome orientated fixed income strategies.”
Abrdn’s Outcome orientated range:
These two funds are each managed to a specific investor objective such as return target, specific risk level or level of income. They are part of a range of three funds which seek the optimum balance between return generation and capital protection:
- Global Income Bond Fund – focuses on providing higher income / alternative to high yield
- Macro Fixed Income Fund – targets diversified returns with low drawdowns. alternative to global fixed income/investment grade credit with Cash +3% target.
- Short Dated Enhanced Income Fund – higher yielding alternative to money markets/cash.
