Smith & Williamson has announced the launch of its Global Inflation-Linked Bond fund targeting investors concerned about inflation and duration risk.
The fund aims to provide a transparent, cost-effective investment solution for such investors, providing them with global exposure predominantly to government-issued inflation-linked debt.
It may also invest selectively in investment-grade sterling inflation-linked corporate bonds with the aim of enhancing returns.
Thomas Wells, part of the group's fixed income team who already manages the £484m Smith & Williamson Short-Dated Corporate Bond fund, will manage the new fund.
Supported by the team, he will seek to add value through country selection, taking positions of plus or minus 10% relative to the benchmark and also actively managing duration within countries.
The Global Inflation-Linked Bond fund will be domiciled in Dublin and will be focused on high-quality global debt with an average S&P credit-rating of AA, with any non-GBP exposure fully hedged to sterling.
It will be benchmarked against the iBoxx Global Inflation Linked Bond Index, also hedged to sterling.
Smith & Williamson is offering investors access to an institutional share class with an annual management fee of 0.25% for 12 months.
Wells said: "We have a good track record of producing transparent and dependable investment solutions in fixed income, and have now extended this to the global inflation-linked arena.
"UK inflation-linked gilts are very expensive and embed a high level of interest rate sensitivity due to their very long duration - in other words, you have to take a view on where UK rates might be headed, as well as having a view on inflation.
"Investing globally means that we can obtain materially better yields to maturity with much less duration risk."
Ed Rosengarten, head of funds at Smith & Williamson, added: "These are exciting times for the funds business at Smith & Williamson and we are delighted to look to continue our track record of providing investment-led solutions to real-world problems.
"Investors are increasingly concerned about inflation and we have listened to them. Gilts, including linkers, have had a stellar 2016 and there is clearly demand out there for better value and lower-risk inflation hedges."
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