Smith & Williamson has launched a global inflation-linked bond fund for manager Thomas Wells.
The Global Inflation-Linked Bond fund will mainly invest in inflation-linked government debt with the ability to also hold investment grade sterling inflation-linked corporate bonds to boost returns.
Wells and the fixed income team – who also run the £484m Smith & Williamson Short-Dated Corporate Bond fund – will take active country bets and manage duration within regions to add value.
Structured as a Dublin-domiciled Ucits vehicle and benchmarked against the iBoxx Global Inflation Linked Bond index, the fund will hedge any non-sterling exposure.
For the first year retail investors can access the institutional share class with an annual management fee of 0.25 per cent.
Wells says: “We have a good track record of producing transparent and dependable investment solutions in fixed income, and have now extended this to the global inflation-linked arena.
“To us, a global inflation-linked fund makes a lot of sense. UK inflation-linked gilts are very expensive and embed a high level of interest rate sensitivity due to their very long duration – in other words, you have to take a view on where UK rates might be headed, as well as having a view on inflation. Investing globally means that we can obtain materially better yields to maturity with much less duration risk.”