The UK-based investment house with a total of over $1 billion of assets under management, Stratton Street, explains its approach in overseeing the Wealthy Nations Bond Fund.
What is the fund's broad mandate and operating philosophy?
The overall investment process focus is on investing in a portfolio of bonds issued by creditor nations with investment grade ratings but also, by separate review, have a strong ability to repay their debt. The assessment of a country’s net foreign assets is an essential component in the investment decision. NFAs may be defined as the value of the assets owned abroad minus any debt owed to foreigners. Effectively, the NFA position seeks to calculate whether a country's indebtedness and/or its exposure to currency risk in its debt, implies a potential instability going forward.
Why was the fund set up?
The fund was set up in response to client interest in the managers’ investment process and record built up in its Renminbi Bond Fund but in a UCITS form and without the currency exposure to the renminbi.
What sort of clients invest in it?
The fund has a very wide diversified client base principally made up of wealth managers from all over Europe but principally the UK and Switzerland.