The fund been seeded with £25m and is structured as Specialised Investment Fund (SIF), suitable for eligible institutional investors only.
The new fund is a non-Ucits version of the €1.8bn Ucits Ignis Absolute Return Government Bond Fund. It will run with double the risk budget of the Ucits fund, targeting volatility of 8% to 12% and a higher absolute return of 10% to 12% return per year over cash.
The fund will be managed by the same team and will run with the same process and strategy as the Ignis Absolute Return Government Bond fund.
The team comprises manager Russ Oxley, head of rates, Stuart Thomson, Ignis chief economist, Adam Purzitsky, senior quantitative portfolio manager and fund manager Paul Shanta.
The group said it aims to translate macroeconomic views into diversified long and short positions, harnessing opportunities across rates, inflation, volatility, foreign exchange and asset swaps. Ignis added that it has identified seven diversified sources of alpha but the fund is predominantly invested in the most liquid government bonds and currencies. It aims to deliver positive returns regardless of market conditions.
The Ignis Absolute Return Government Bond Fund has been a consistent performer, delivering between 4.2% and 6.3% in each calendar year since its launch in March 2011. The fund performance has not shown significant correlation with other asset classes or other absolute return managers. It has shown negative correlation with the MSCI World index since inception.
The team is currently positioned for continued growth in the US and UK, as the economies benefit from the lagged impact of negative real rates. European growth, in contrast, is likely to remain subdued, but Japan’s Prime Minister Shinzo Abe may surprise positively on reform, leading to currency weakness and rising yields.
Ignis is also still negative on emerging economies, which it believes will see headwinds from the withdrawal of global liquidity as and when the Fed begins the process of QE tapering.
