Aberdeen Standard Investments launches short duration fund

Aberdeen Standard Investments has launched a Global Short Duration Corporate Bond Fund that it says will cater for investors increasingly wary of the effect of rising interest rates on their fixed income investments.

As many of the world’s central banks begin to move away from extraordinary monetary policy settings, investors are growing ASI said its new fund seeks to deliver attractive risk-adjusted returns from a diverse portfolio of global corporate bonds, but with significantly reduced interest-rate risk.

Fund Manager, Samantha Lamb said:“Fundamental credit research and conviction views on companies are critical to our alpha generation. By investing primarily in short-maturity bonds, the Global Short Duration Corporate Bond Fund is an option for investors concerned about interest-rate risk who continue to seek value from credit spreads and active management across a global credit opportunity set.”

Jeremy Lawson, Chief Economist said: “Today the Bank of England has lifted its policy rate for the first time since July 2007. Because the rate increase is already priced in, markets will be mainly focused on the communication accompanying the move and what it means for future policy.

“Despite the symbolic significance of today’s rate increase, this will be a very shallow and gradual tightening cycle. We think that the Bank will be able to lift rates at most only three more times over the next few years as Brexit uncertainty, lower potential growth and the elevated level of consumer credit hold down the interest rates that the economy can absorb without rolling over.

“If we are right about the outlook for UK policy rates, the pace of the BoE’s tightening cycle will be intermediate between that of the Fed on the one hand, and the ECB and the Bank of Japan on the other. In the US we expect at least five rate increases over the next two years, beginning in December. More are possible if a sizeable tax cut package is passed in the coming months.”