Lugano-based Hedge Invest Suisse has launched a new Finma-regulated fund, Citywire Switzerland can reveal.
The HI Numen Bear Rates fund aims to benefit from the rising interest rate environment and monetary policies that affect asset prices.
In order to achieve this goal the fund will short global government bonds based on the expectation that interest rates will rise and cause a fall in the value of fixed income instruments.
The majority of the fund’s positions will take advantage of rates using short positions in bond futures and long positions in bond put options.
The fund will also maintain long positions in credit default swaps or credit indices such as the ITRXX Main Index and the CDX US IG Index in expectation of increasing defaults by credit issuers in a rising interest rate environment.
The strategy will typically invest in G10 economies, though it is not restricted to them. It will be able to use the following risk/reward strategies: fundamentally driven directional strategies, relative value strategies and macro trading.
The general manager of Hedge Invest Suisse Marco Alazraki said this new product allows investors to protect the long part of their bond portfolios, which they often maintain because of their risk/revenue profile or for diversification purposes.
He added that for individual investors it is not always easy and efficient to take a short position in the bond market, which is where the new fund comes into play.
‘The valuations have reached extreme levels and the central banks are moving towards a policy of normalisation of the interest rates (as has already began in the US), which will change the bond environment over the next years.’