Opalesque Industry Update: Stratton Street Capital LLP has announced the addition of two further currency classes to its Renminbi Bond Fund: the offshore Renminbi (CNH) and the Swiss Franc reflecting broad investor demand for this strongly performing investment vehicle. |
Through 2011, the Renmimbi Bond Fund increased in size from $47 million to $93 million by the end of the year. Investors saw a return of 9.73% on the US dollar class. This compares with the return of the HSBC Offshore Renminbi Bond Index which returned 1.63% in US dollars.
The new currency classes have been split in to two further sub-classes, one for Advisors and Wealth Managers and a separate sub-class for Institutional Investors, in order to widen distribution of the fund. Dealing remains on a weekly basis with a further dealing day added, based on the month end NAV (Net Asset Value).
Commenting on the addition of the offshore Renminbi to the Fund’s currency classes, Andy Seaman, Partner and Portfolio Manager at Stratton Street Capital, said: “The offshore Renminbi bond market, which it is still in its infancy, trades relatively expensively to the onshore domestic market. Our Fund is unique in that it offers Renminbi exposure by taking a portfolio of Asian bonds and adding the currency exposure to the Renminbi US dollar rate. By doing this, we are then able to create a higher grade portfolio and achieve a yield much greater than the Offshore Renminbi (Dim Sum) Bond market.
“Currently our portfolio is yielding 6% gross against 2% gross for a similar duration Dim Sum portfolio. We remain fearful that the performance of the Dim Sum market will need to correct further with yields rising and portfolios underperforming, as increased bond issuance introduces further liquidity.
“We remain ready to invest directly when we believe the time and the quality of the debt issues reflect the wider bond market opportunities. In the meantime, we believe that this is a well-structured way of maximizing returns for holders of CNH and other currencies.” Stratton Street Capital LLP saw further rise in overall assets under management and advice, which rose from $593 million at the start of the year to $940 million at the end of 2011.