Bandon Capital Management plans to launch its first mutual fund, the Bandon Isolated Alpha Fixed Income Fund.
The fund will launch at the beginning of the New Year and will seek to provide absolute returns using fixed income instruments.
The fund is structured to address the two principal risk factors associated with fixed income investing: interest rate risk and credit risk.
Unlike long-only bond funds it will pursue absolute returns by seeking to profit in rising and falling interest rate environments by taking both long and short positions.
The fund will use two institutional managers each implementing their strategies in an absolute return fashion: Dix Hills Partners, a USD1bn New York headquartered firm focused on active duration strategies in US Treasury and other sovereign debt markets; and Logan Circle Partners, a USD11bn Philadelphia headquartered firm focused on absolute return, duration neutral credit strategies.
“Many investors have recently fled their core fixed income allocations in favour of floating rate investments, high yield bonds, and or dividend paying stocks. We view these as significant asset allocation decisions and are looking to provide a new and innovative option to investors looking to reduce the buy and hold risks within their fixed income portfolios,” says Bill Woodruff, Bandon’s founder and president.
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