Aegon Asset Management (Aegon AM) has unveiled a new fund providing opportunities for investment in asset-backed securities (ABS).
The Aegon ABS Opportunity Fund will focus on on European ABS markets and target securities with non-investment grade credit ratings, aiming for a through-the-cycle return of 500 basis points.
The asset manager believes that the strategy of the freshly-launched fund will provide investors with multiple distinct benefits in the alternative fixed income space, such as an attractive risk/return profile, low interest sensitivity, and an attractive yield.
Managed by lead portfolio manager Frank Meijer, Aegon AM believes the fund will provide favourable drawdown, return and volatility characteristics for investors.
Alongside Mr Meijer, the fund will additionally utilize the expertise of Aegon AM’s global ABS team, which consists of twenty members and currently manages €15 billion in ABS globally.
Commenting on the new fund, Mr Meijer believed that it would provide investors with a credible alternative to more conventional fixed income funds.
He said : “We believe that clients have been drawn to ABS for a number of reasons, not least the attractive yield offered compared to traditional fixed income. Our new ABS offering is a relatively liquid alternative fixed income strategy that compares favorably with other potential options such as hedge funds which investors may consider too volatile or traditional fixed income like high yield where there is insufficient yield – especially in current markets.”
It should be noted that ABS differ from their more notorious relative, mortgage backed secruties as an ABS can contain no mortgages but other loans are such as student debts are fine. Mortgage backed securities were widely held responsible for the near implosion of the US housing market in 2008-2009.
The fund is an Irish domiciled "Qualifying Investor Alternative Investment Fund" (Irish QIAIF).
It is currently available for sale in UK, NL, Ireland, Belgium, Spain, Italy, Denmark, Finland, Sweden and Norway.
