Challenger-backed fixed income manager Kapstream Capital is set to launch a new regional bond fund that will invest in 10 Asian countries over the next three months.

Kapstream is currently in the process of establishing a Cayman Island-based investment vehicle and has some interest from investors in the United States.

"We're setting up an offshore vehicle, because our interest comes from US and non-Australian-based investors. We are going through the legal process of putting that together and then we've got some soft commitments on seeding the fund," Kapstream Capital managing director Kumar Palghat said.

"They are interested, because US-based investors are getting paid almost nothing [in domestic fixed interest].

"The basic vehicle will have exposure to 10 Asian investment-grade countries, issued in hard currency, so it's going to either be in [US] dollar, euro or yen, and then we are going to have a passive 10 per cent exposure to the currencies of the 10 countries.

"So not only will we get a return from the bonds, but - if you believe that Asia will be the engine of growth then - you get the currency appreciation as well."

Kapstream has been growing steadily since its establishment in 2007, but has experienced an acceleration in inflows in recent months.

It grew from $1.6 billion in funds under management (FUM) in June last year to $3.8 billion currently. About $1.5 billion is invested in the company's absolute return strategy.

Clubplus was one of the more recent super funds to add Kapstream to its alternative investments portfolio.

Kapstream also runs a sovereign bond fund, as well as bespoke mandates.