Geneva-based Banque Cramer has launched a fixed income fund of funds in cooperation with BlackRock, Citywire Selector's sister site Citywire Switzerland can reveal.
The BCC Fixed Income Opportunities fund is a Ucits-compliant vehicle and will be available for external subscription from mid-March 2017.
The strategy is the first of its kind in Switzerland and is going to be available for public distribution on the Swiss market once it receives Finma approval.
The fund is an unconstrained strategy and for now invests in BlackRock funds only. It is available for both private and institutional investors.
‘Banque Cramer is the investment manager of the fund and will make use of model portfolio data provided by BlackRock,’ said CIO Placido Albanese.
The management fee of the fund is 0.6% for retail and 0.4% for the institutional share class. The weighted TER of the underlying target funds is around 0.6% so the total cost will be around 1.2%.
‘We were very conscious about the cost impact, especially for a fixed income solution. It might be slightly higher than some single unconstrained bond funds, but it is still competitively priced for a fund of funds structure.’
The target volatility of the strategy is 4.5% with an upper limit of 6%, while a target return of one month Euribor is +3% per year over the investment cycle.
Fixed income appeal
Albanese said against a backdrop of rising interest rates and the resurfacing of inflation, fixed income is still the most popular asset class for investors.
‘It is definitely important for our bank because fixed income is by far the biggest asset class that our clients own and I bet many other banks are in a similar position.’
He added that for the past couple of years, a lot of analysts have been talking about the end of the fixed income bonanza.
‘At the end of last year it seems we witnessed the lowest levels of yields and that means the market could become more challenging when it comes to fixed income investing.’
Albanese said in this kind of environment, it is beneficial for Banque Cramer to cooperate with BlackRock.
‘Having one of the biggest asset managers providing strategic asset allocation services by using its model portfolio data in an unconstrained bond fund is a good idea as we can leverage BlackRock‘s global insight, expertise, sophisticated risk management and portfolio analytics.’