The recently assigned multimanager team at global investment group Credit Suisse plans to launch a Multi Asset Distribution Fund aimed at producing more competitive yields. This move follows a strategic review of all the Credit Suisse Multi-Manager Funds.
"We propose an enhancement to the investment parameters to allow investment in a wider range of assets, including equities, property and alternative investments to enable us to produce a very competitive and consistent yield on the new fund," said Graham Duce, co-head of the Credit Suisse Multi-Manager team, which was formed only three months ago. "The main investment objective of the new fund will be to achieve income, and we will be aiming to generate a quarterly yield payment for investors."
Duce added that the fund will be looking at assets in the fixed income market and will invest in senior secured debt. The team believes the new Multi Asset Distribution Fund will deliver a gross annual yield of more than 5%, based on forecasts and the model portfolio, in current market conditions.
"When compared with other distribution funds within the IMA sectors, the yield is very attractive and competitive," Duce added. "The main investment objective of the new fund will be to achieve income, and we will be aiming to generate a quarterly yield payment for investors."
This type of fund has traditionally been limited to private banking clients at the firm. This is the first time Credit Suisse will offer this sort of product to the U.K. retail market.
A key proposal includes Credit Suisse Multi-Manager Global Bond Fund being re-launched as Credit Suisse Multi-Manager Multi Asset Distribution Fund. According to Credit Suisse, the fund will help lift the more restrictive elements involved in international fund management.
Credit Suisse also proposes to combine a number of regional funds into an international fund, bringing in-house the asset allocation calls, which it hopes will have positive tax benefits for investors in the funds.
"We believe strong risk-adjusted returns can be achieved better through focused international funds, as opposed to a series of regional funds," said Aidan Kearney, another member of the Multi-Manager team. "We can be more nimble with portfolio changes and it ensures that our time is more targeted on the search for alpha."
Anecdotally, Kearney added, a large proportion of the IFA market would rather leave regional and asset allocation calls to fund managers, making a single global fund more appealing both from an investment and a personal tax perspective, as switching between funds within a multimanager portfolio doesn't trigger any direct tax implications for the individual.
The Multi Asset Distribution Fund's new asset allocation will be structured in a flexible format with fixed interest making up 20% to 40% of the fund, private equity 20% to 30% and U.K. equity income 10% to 30%. Other assets, such as overseas equity, property and cash, each may make up to 10% to 20% of the fund. The fund is subject to shareholder approval Aug. 10.
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