Fixed-income yield curves and credit spreads are expected to be dramatically impacted by the Federal Reserve’s interest-rate decisions later this year, and that has put a lot of bond-market investors in a quandary: Should I dump my debt holdings and take on equity risk? Liquid alternatives give even modest investors new options, including “unconstrained” fixed-income funds like the newly launched Columbia Global Unconstrained Bond Fund (CLUAX), which invests across the full spectrum of debt and currency markets in pursuit of absolute returns with low sensitivity to interest rates, credit spreads, and general market volatility.
Designed for the New Normal
“The fixed income world has undergone structural change and the characteristics that once defined fixed-income asset classes are becoming obsolete – witness the near-zero yields in some high-quality bonds,” said Jim Cielinski, Global Head of Fixed Income at Columbia Threadneedle Investments and one of the funds three portfolio managers, in a June 30 press release. “The Columbia Global Unconstrained Bond Fund is designed to exploit these new investment conditions by having the flexibility to invest successfully across a broad risk spectrum.”
In addition to Mr. Cielinski, the fund’s managers include Martin Harvey and Gene Tannuzzo. Mr. Harvey has been with Threadneedle since 2003 and is also the lead manager of the firm’s Euro Aggregate Bond portfolios. Mr. Tannuzzo also joined Threadneedle in 2003 and is a senior portfolio manager for the company’s strategic income and multi-sector fixed income funds.
Strategy Already Available in Europe and Asia
The Columbia Global Unconstrained Bond Fund’s portfolio managers employ a fundamental, research-driven investment process. They’re also able to leverage Columbia Threadneedle’s team of over 180 professionals managing more than $200 billion in assets. The fund’s managers’ views may be expressed through long or short exposures to interest rate, credit, and currency markets, with the ample flexibility to navigate across various market environments and capitalize on current trends. Its objective is to complement other total return and yield-oriented strategies, and its benchmark is the Citi 1-month U.S. Treasury Bill Index.
Although the fund just launched on June 30 in the U.S., the strategy has been available to investors in Europe and Asia for some time now. “I am excited to bring this capability to the U.S. market, which adds to the Columbia Threadneedle Investments suite of absolute return capabilities,” said Mr. Cielinski.
For more information, visit columbiathreadneedleus.com.