Union Investment Launches New Multi-Credit Fund

Mar 25 2017 | 2:09am ET

Frankfurt-based institutional asset manager Union Investment has reportedly launched a new multi-credit fund aimed at combatting the current low-yield environment. 

The new fund, named UniInstitutional Multi Credit fund, is domiciled in Luxembourg and was formally launched last week, according to an article in Citywire. It will invest in standard coupon bonds and floating rate securities across the capital structure, including subordinated debt, financial bonds, CoCos, convertibles, covered bonds and structured credits. 

However, the fund’s portfolio will carry a minimum average rating of investment grade and a minimum of B− for individual securities at the time of purchase, the article continued. Overall, the fund’s annual investment return objective is gross 2.5-3 percentage points above the 3-month Euribor rate. It is designed to serve as an alternative for medium-term to long-term investments for proprietary account investments.

The new vehicle is aimed at an institutional audience and will best suit investors seeking to diversify their current fixed-income exposure with a medium- to long-term alternative that is managed outside the constraints of a benchmark, Union Investment added. 

“An investment rethink is required in the current capital market situation,” the company said in a statement to Citywire. “In our estimation, the environment of low interest rates will persist in the medium to long term and even negative returns are now ubiquitous. It will therefore become all the more important to actively manage portfolios in a way that optimizes investment gains and presents the opportunity for higher returns.’

Union Investment Group was founded in 1956 as the investment arm of Germany’s banking cooperative, a consortium of credit unions, savings banks and local financial services firms. The company serves more than four million customers and managed €262 billion at the end of 2016.


In Depth

Q&A: Old Hill's Stone On Private Debt, P2P And Credit Bubbles

Jun 7 2017 | 12:52am ET

While institutional capital continues to flow into the broader private debt sector...

Lifestyle

CFA Institute To Add Computer Science To Exam Curriculum

May 25 2017 | 2:25am ET

Starting in 2019, financial industry executives sitting for the coveted Chartered...

Guest Contributor

7 Things You Didn’t Know About Direct Lending Funds

May 31 2017 | 2:07am ET

Direct Lending has become one of the hottest areas of alternative finance as investors...

 

From the current issue of