Standard Life Investments

Ignis Fixed Income, Absolute Return Government Bond fund

The Absolute Return Government Bond Fund aims to provide positive investment returns on a rolling twelve months basis, independent of bond and equity market conditions.

The fund aims to achieve its objective within a target volatility of between three to six percent.  It is actively managed using a combination of assets (such as government bonds, foreign currency markets and money market instruments) and ‘derivatives’. In particular the fund will utilise strategies to actively manage interest rate exposure.

Derivatives are sophisticated investment instruments linked to the rise and fall of the price of other assets.  The fund uses derivatives to meet its investment objectives, for example, for short selling techniques (which are designed to make a profit from falling prices). Derivatives can create leverage, magnifying the effect of a change in the price of an asset, and in extremely adverse markets, when significant events such as the failure of market participants or certain financial instruments become difficult to trade, the leverage from using derivatives can magnify losses. Derivatives are monitored and controlled to ensure the fund is not exposed to excessive or unintended risks.

Investors should be aware that their capital is at risk and that there is no guarantee that the positive total returns will be achieved over the rolling twelve months or any time period. 

Overview

Diversification: takes long and short positions in the most important and liquid global government bonds and currencies. Returns are lowly correlated to traditional equity and bond funds. The fund has no corporate bond exposure.

Seeks positive returns in all market conditions: the fund is designed to provide investors with absolute returns (on a 12 month rolling basis).

Investment flexibility: the fund invests in derivatives on interest rates, currencies and fixed or variable interest government securities to reflect the managers' views. Non-Sterling currency exposure is limited to 25% of the risk budget of the fund.


image

In this update for the Ignis Absolute Return Government Bond Fund, Jonathan Gibbs, Shayne Dunlap, Richard Marshall and Stuart Thomson discuss fund performance, positioning and give an overview of the team’s macro-economic outlook for the months ahead.

#A 'long' trade is buying a security in the anticipation that its price will rise. A 'short' trade is one that sells a security, in the expectation that its price will fall.

*The cash level is based on the overnight rate. This is the rate that large banks use to borrow from, and lend to, one another on the overnight market. In the UK this is SONIA (Sterling Over Night Index Average) and EONIA in Europe.

All information as at 31/07/15 unless otherwise stated. Past performance is not a guide to future performance. The absolute return nature of the strategy means it is targeting positive returns, but this is not a guarantee and investors may not get back the original capital invested. The funds take long and short positions based on the fund manager's views of the market direction. This means the fund's performance is unlikely to track the performance of broader bond and equity markets. While this creates the opportunity for a fund to deliver positive returns in falling markets, it also means that a fund could deliver negative returns in rising markets. The potential loss on a short position is unlimited, because the price can carry on rising. For a long fund, the maximum loss is the amount paid for the asset. Exchange rate movements may cause the value of investments to fluctuate. The fund is a sub fund of Ignis Global Funds SICAV, an investment company organised under the laws of the Grand Duchy of Luxembourg as a Self Managed SICAV. It is authorised and regulated by the Commission de Surveillance du Secteur Financier (CSSF) in Luxembourg.