UBS launches Ucits III bond fund

The UBS Absolute Return Bond fund will be available to the retail market through the group’s UK Oeic on March 21. The fund will be modelled on the £1.8bn UBS Absolute Return Bond fund from its Luxembourg-domiciled range, which was launched last May. The Luxembourg fund currently has over 40% of its portfolio invested in corporate bonds, according to Tristan Mawdsley, head of UK retail sales at UBS.

The fund will take advantage of new Ucits III rules, which allow the portfolio to use bond futures to minimise its sensitivity to global interest rates. The fund will not invest in any equities, but will hold a global mixture of government, investment grade, emerging market and high yield bonds.

According to Mawdsley: “The Ucits III regulations are a key component of this fund, as they allow us to utilise other financial instruments at the portfolio level and substantially reduce risk”.

UBS says that up to 60-100% of the portfolio will be exposed to global investment grade bonds, with the remainder held in global high yield and emerging market bonds.

The minimum investment in the fund is set at £1,000, with an initial charge of 1%. Its annual management charge will also be 1%.

>From its launch on March 21 until April 8, UBS is offering the fund to investors at a fixed offer price of 50p. UBS currently offers eight other funds within its UK retail range.