Asset management firm Principal Global Investors (PGI) has launched a high-yield, limited-duration debt fund.
The new fund was established in partnership with PGI subsidiary Post Advisory Group, a United States asset management firm led by founder and chief investment officer Larry Post.
The Post Global Limited Term High Yield Fund, a Dublin-registered UCITS vehicle, invests in high-yield debt with an average maturity of 12 to 24 months.
"We estimate that only 2 to 3 per cent of high-yield managers specialise in limited term, so there is a dearth of expertise in this area," Post, who was also a founder of the high-yield bond department at Smith Barney, said.
"With most market participants reaching for absolute yield, the limited term segment has been systematically undervalued.
"This fund addresses a fundamental and timely market need: with a rise in interest rates looking likely, limited-duration bonds become more attractive as they are less sensitive to destabilising market movements," PGI chief executive for Australia Grant Forster said.
Forster also said PGI continued to expand its multi-boutique model and had experienced strong demand for emerging market products.
"Our client base is moving its exposures to emerging markets. Sovereign clients are not just into the 50 per cent US and 50 per cent the rest of the world split; they see emerging markets as a real opportunity," he said.
PGI's client base includes sovereign funds in Asia and Latin America, including the Government Pension Investment Fund in Japan and the National Council Social Security Fund in China.
In Australia, it has clients among independent financial adviser dealer groups, for which it devises model portfolios, superannuation funds and multi-manager groups.
"They are not assuming the old developed/undeveloped split; they see that you are better off in emerging markets," Forster said.
In April, PGI acquired a majority stake in Finisterre Capital, a United Kingdom-based hedge fund manager, which has a strong focus on emerging market debt.
"The transaction should close in the third quarter of this year. We acquired over 50 per cent and would like to grow it to 70 per cent over the next three years," Forster said.
In April, Principal also expanded its pension business in Mexico with the acquisition of HSBC's Mexican pension funds management business, HSBC Afore, making it the fourth largest player in Mexico's pension market.
