Insight investment has announced the Ucits launch of its Insight Short-Dated High Yield Bond fund.
The strategy has already been running for over three years as an Irish qualified investment fund. As part of the launch, QIF assets worth approximately £200m will move to the Ucits fund.
The fund will focus on short-dated, high-yielding securities with the aim of providing investors with access to more attractive risk-adjusted returns and with less volatility than traditional high yield bonds.
Insight Short-Dated High Yield bond fund manager Ulrich Gerhard says: “The biggest protection against the credit risk of holding high yield is short duration.
“Buying short-dated high yield bonds can also enable investors to capture structural inefficiencies in credit markets.”
The holdings in the fund currently have an average expected maturity of 1.1 years, as of mid-June 2013, while around 45 per cent of the assets also have a hard maturity date by year-end 2015.
The remainder of the portfolio is constructed of callable asset with high coupons or story specific events with a strong likelihood of early refinancing, according to the asset manager.
Insight head of insurance solutions Simon Richards says: “A number of our insurance clients have committed investments immediately following the launch of the Ucits fund where they can now secure access to this market in a fully admissible fund format.
”While high yield bonds will never, and indeed should not, make up a significant part of an insurers’ overall portfolio, as a non-core, return-enhancing alternative, we believe that high yield bonds in a shorter-maturity format do make sense and should have an active role in insurance portfolios.”