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Adam Smears, Skandia Investment Group’s head of fixed interest research

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Skandia launches investment grade corporate bond fund

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Skandia Investment Group is launching an investment grade corporate bond fund to supplement its Dublin-based range of single manager funds.

The fund aims to take advantage of the opportunities created by historically wide investment grade spreads.

SIG has awarded the mandate to run the fund to US based institutional fund manager Wellington Management.

The fund aims to generate excess returns over a global credit index by investing primarily in investment grade corporate bonds.

The investment manager has the flexibility to use other debt instruments than investment grade corporate debt, such as mortgage backed securities, convertible bonds, high yield bonds among others, although such flexibility is not expected to account for more than 30 per cent of the portfolio. 

The fund will be benchmarked to the Barclays Capital Global Aggregate Corporate Index hedged to US dollar. Currency risk is primarily hedged to the share class currency, although the manager may unhedge partially at their discretion when they see an investment opportunity.

The fund will be available in US dollar, Euro, Sterling and SEK hedged share classes.

Head of fixed interest research Adam Smears (pictured) says:" Investment grade corporate bonds still offer good value, with corporate bond spreads wider than historical averages and Wellington have a good track record of generating outperformance even through the 2008 credit crisis. In a low yield environment, this is a strong alternative to a straight government bond portfolio.

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