The Ucits III opportunity for fixed income investors

The increased investment powers allowed within Ucits III have given fund managers a far broader tool...

The increased investment powers allowed within Ucits III have given fund managers a far broader toolkit. Fixed income managers now have the ability to focus more on the generation of absolute returns within a less constrained universe. So what exactly are these new powers and why have they generated so much excitement? The key is the usage of derivatives. Under Ucits III, a sophisticated fund has the ability to put on short selling strategies via the use of derivatives. This means they can position their fund to profit when bond prices are falling, either in an absolute or a relative sens...