The Schroder ISF Euro Credit Duration Hedged Fund, which is part of the Luxembourg-domiciled International Selection Fund Sicav, will aim to provide investors with exposure to opportunities in the Euro corporate bond market, but without interest rate duration.
Schroder said it launched the fund in response to the concerns of some investors about the possibility of further rises in euro interest rates and increases in European government bond yields, which would erode the value of bond investments.
It is managed by Adam Cordey, Schroder’s head of UK & European Credit Strategies and manager of the Schroder ISF Euro Corporate Bond Fund. The company said the two funds will follow broadly similar investment themes and use the same resources, but that the interest rate duration of the new fund will be managed close to zero.
“We believe this could be an attractive proposition for investors who are worried about being exposed to interest rate risk but would still like to be invested in corporate bonds,” said Cordery. “We are seeing significant opportunities in the investment grade corporate bond sector, in particular in subordinated bank debt and cyclical industrial bonds.
“The current climate of modest global economic growth should, in our view, support lower default rates and improving credit quality among corporate bond issuers in the UK and Europe.”
