Man Group and Nomura have joined forces to launch an Alternative Ucits fixed income fund designed to take advantage of the current low interest rate environment.
The alternative investment specialist will work with the Asian investment bank on the new strategy, which is called the Nomura Man Systematic Fixed Income UCITS Fund.
It is based on an underlying strategy run since summer 2012 by Man Systematic Strategies (MSS), which merged with Man’s managed futures arm AHL.
The new fund will be co-managed by Andre Rzym, who was former head of fixed income at AHL, and Stefan Sluke.
The fund will invest mainly in directional opportunities in emerging and developed swaps, futures and FX markets. It will trade a balanced portfolio of 50 markets based on 300 systematic trading signals.
Man Group said development of the fund had been focused on how it performs during periods of market stress. It therefore trades liquid instruments, uses low margin-to-equity ratio and does not pursue options with pronounced tail risk.
Commenting on the launch Sandy Rattray, CEO of AHL-MSS said: ‘Traditional fixed income investing is clearly challenged in the current environment with interest rates being close to zero per cent.’
‘In contrast, the backdrop for alternative fixed income investing is favourable: the competition for pursuing alpha opportunities has diminished as banks have reduced their risk taking in fixed income markets considerably since 2008, creating the potential to generate strong returns.’
‘However, it has been difficult for investors to tap into these opportunities in a UCITS-compliant way with daily liquidity. We are therefore pleased to make such an offering available to investors.’
This marks the latest development in a long-standing relationship between Man Group and Nomura which includes a $1.5 billion Japan fund as well as working together on asset raising. MSS will actively run the strategy, while Nomura will provide access via a range of investment products.