Skandia Investment Group (SIG) has appointed TwentyFour Asset Management to run a £90m mandate for its Skandia Sterling Bond Fund.
The move aims to take advantage of the current environment where the threat of rising interest rates, following historic lows, suggests most corporate bond funds are running a high degree of interest rate risk. SIG therefore believes there is an opportunity to develop a corporate bond fund with a significantly lower interest rate risk profile.
SIG Portfolio Manager Adam Smears said that by splitting and managing the credit and interest rate risk components of the fund’s bond portfolio separately, TwentyFour can target attractive risk-adjusted returns with a lower degree of volatility and a strong emphasis on capital preservation.
“TwentyFour differentiates themselves in a number of key areas. Firstly, the managers (Gary Kirk and Eoin Walsh) disaggregate risk with effective usage of derivatives to target specific trades they wish to make – and adhere to industry best practise when doing so. Furthermore, they focus on credit research work, and have specific expertise in areas where there is a higher value-add such as asset backed securities. Finally, the managers combine both top down macro views and bottom up stock selection in order to construct a dynamic portfolio seeking to add above average alpha.”