Aviva Investors, the global asset management business of Aviva plc, today announced the launch of the Aviva Investors Convertible Bond Opportunity Fund.
Aviva Investors, the global asset management business of Aviva plc, today announced the launch of the Aviva Investors Convertible Bond Opportunity Fund. It aims to provide institutional investors with income and capital growth by taking advantage of the significant discounts currently available on global convertible bonds.
The new fund, to be co-managed by David Clott, Shawn Mato and Tom Wills, will invest in investment-grade convertible bonds issued worldwide, with no restrictions on region. The managers will invest in high quality companies and will not use leverage or invest in securities other than convertible bonds.
The Aviva Investors Convertible Bond Opportunity Fund aims to take advantage of the current turmoil in global bond markets that the fund's managers believe has left convertible bonds undervalued. It will benefit from a management team with more than 30 years of combined investment experience in convertible bonds and build on Aviva Investors strong track-record across long-only assets including the Aviva Investors Global Convertibles Fund, a Luxembourg domiciled UCITS, which has outperformed its benchmark since launch in 2002.1
David Clott, one of the co-managers for the Aviva Investors Convertible Bond Opportunity Fund, said: "The recent market volatility has created a dislocated market in convertible bonds. At the start of 2008, we estimate around 70% of convertible bond funds were owned by hedge funds, though many of these have since been forced to aggressively sell their holdings as a result of investor redemptions and the ban on short-selling. This widespread forced selling has created a dramatic mis-pricing in the convertible bonds market, with many convertibles trading at substantial discounts to fair value.
"We believe this opportunity will be relatively short-lived as these prices could return towards fair value quite quickly. As a result, there may only be a short window of opportunity to secure the best-priced bonds and hold them to maturity over a three-year period."2
The Aviva Investors Convertible Bond Opportunity Fund will be open for one month starting on 5 January 2009. It will be structured as a closed-ended Luxembourg-domiciled Aviva Investors SICAV-SIF.
At the fund inception, it will invest in between 20 and 50 global Investment Grade Securities, with the majority likely to be US companies. Securities will be held for a short duration to maturity, on average about two and a half years, giving relatively low volatility and a greater likelihood of reaching the performance objective.
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For more information contact:
Angela Warburton
Corporate Communications
+44 (0)20 7809 8618
Notes to editors:
1 Source: Lipper Hindsight, bid to bid, gross income reinvested, USD Share Class A, benchmark UBS Global Focus (USD) Index
2 The term of the fund is expected to be three years. However in order to take full advantage of market conditions the term may be up to four years. The precise term will be determined at the start of the offer period. Full details are available in the Private Placement Memorandum.
Unless stated otherwise any opinions expressed are those of Aviva Investors Global Services Limited. They should not be viewed as indicating any guarantee of return from an investment managed by Aviva Investors nor as advice of any nature.
Past performance is not a guide to the future. The value of an investment and any income from it can go down as well as up. Investors may not get back the original amount invested. Full written terms and conditions are available on request.
Aviva Investors
Aviva Investors is the global asset management business of Aviva plc, the world's fifth-largest insurance group. The company operates under a single brand with more than 1,100 employees in 21 locations across Asia Pacific, Europe, North America and United Kingdom.
Aviva Investors combines the following former businesses in: Australia (Portfolio Partners); France (Aviva Gestion d'Actifs); Ireland (Hibernian Investment Managers); North America (Aviva Capital Management, Aviva Investment Canada); Poland (CUIM Polska); Romania (CertInvest) and United Kingdom (Morley).
Aviva plc
Aviva is the leading provider of life and pension products in Europe with substantial positions in other markets around the world, making it the world's fifth largest insurance group based on gross worldwide premiums at 31 December 2007.
Aviva's principal business activities are long-term savings, fund management and general insurance, with worldwide total sales of £49.2 billion at 31 December 2007 and funds under management of £359 billion at 30 June 2008, of which £235 billion is managed by Aviva Investors.
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