A new fund from Lyxor and Wells Fargo Asset Management aims to generate returns by investing in high-yielding debt from financial firms.
The investment vehicle, dubbed the Lyxor/Wells Capital Financial Credit Fund, adds onto Lyxor’s existing €2.6bn Alternative UCITS platform.
It will concentrate on fixed income credit instruments such as convertible bonds of global financial sector companies with a European focus.
“The global high yield financial bond sector has become a significant stand-alone asset class, with expected issuance volumes of approximately €230bn* over the next five years,” executives wrote in a joint statement.
“Due to the greater oversight, stricter regulation and liquidity constraints imposed on the financial sector, high-yielding financial bonds offer an attractive risk-return profile compared to corporate bonds.”
Both Lyxor and Wells Fargo's investment experts believe that their credit research and active asset allocation has the potential to generate sustainable returns over the long term.
Satish Pulle, a senior portfolio manager at ECM Asset Management, part of Wells Fargo Asset Management, will lead the investment team.