Distinction converts Cautious Return into multi-manager fund

Distinction Asset Management has converted its Cautious Return fund into a multi-manager absolute return portfolio, managed by Armstrong Investment Managers.

The £29m fund, abbreviated to D-CAR, is Dublin-domiciled and structured as UCITS III.

Underlying managers include M&G’s Richard Woolnough, Investec’s emerging market debt specialist Peter Eerdmans, and Franklin Templeton’s Michael Hasenstab.

The portfolio targets long-term absolute returns of 2% above cash every year through a combined stock selection and macro focused investment style.

Ana Armstrong, fund manager and chairman of Distinction, said: “We have designed the investment approach of this fund to take advantage of opportunities across different regions, currencies, types of fixed income instruments and a broad spectrum of markets.

"We then outsource to specialist managers, utilising varied investment styles, to target consistent returns from a range of traditional and alternative fixed income funds and positions. The mandate is very flexible and does not force an allocation to any particular sub-set of the fixed income universe.

“As the market comes to the realisation that inflation is the consequence of the actions of central banks, many safe havens will fail and put cautious investors at risk of significant real and nominal losses. Delivering consistent positive returns will become much more important than just preserving wealth.

"We believe our flexible fixed income mandate, which is not structurally long of assets that will be hurt by higher interest rates, is a sensible approach in this type of environment.”

Funds selected:

Strategic bond: M&G Optimal Income, Newscape Strategic Bond, TwentyFour Dynamic Bond, Investec Strategic Bond

Inflation-linked: Fidelity Global Inflation Linked Bond, iShares Index Linked ETF

High yield: Muzinich Short Duration High Yield

Emerging market debt: Investec Emerging Market Debt, Templeton Asian Bond, iShares Emerging Market Bond ETF

Absolute return fixed income: Ignis Absolute Return Government Bond, BlackRock Absolute Return Bond, Kames Absolute Return Bond