Smith & Williamson launches Global Inflation-Linked Bond fund

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. 

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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.

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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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• Topics
• Global
• Smith and Williamson
• Global
• bond funds
• fund launch
• Inflation

About the author

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• Jayna Rana
• @Jayna_Rana

Jayna is senior reporter and investment trust correspondent at Investment Week. She joined the publication in August 2015 after graduating with an MA in Multimedia Journalism from the University of Kent.

Jayna holds the NCTJ diploma and has experience in print, online and broadcast journalism. She regularly contributes towards the Investment Week monthly podcast.

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