In September, Credit Suisse Asset Management is again offering investors the opportunity to partake in a bond fund with a fixed maturity. Credit Suisse (Lux) Fixed Maturity Bond Fund 2020 S-1 seeks to provide investors with an attractive yield pickup with a short, predetermined maturity date.
The fund invests mainly in USD-denominated corporate bonds with a maximum maturity on September 30, 2020. The target allocation of the fund includes both investment-grade and non-investment-grade bonds from developed and emerging markets. The fund’s portfolio is projected to have an average investment-grade rating. This actively managed fund invests mainly in bonds that will mature close to the fund’s maturity date. “By holding onto the bonds until maturity, investors benefit first from regular returns over a fixed time horizon. At the same time, the interest rate and spread risk decreases as the bonds move closer to maturity,” explains Romeo Sakac, Senior Portfolio Manager at Credit Suisse.
Depending on market conditions, the projected (gross) yield-to-maturity is between 3.0% and 3.5%. For non-retained USD share classes, the fund aims for semi-annual payouts of 2.0% p.a. This UCITS-compliant fund domiciled in Luxembourg thus provides investors with an attractive yield in a market environment characterized by very low – and even some negative – interest rates. This allows the fund to have a payout structure similar to a single bond investment, but the potential risk of loss through default by an individual issuer is significantly reduced, thanks to the broad diversification of the portfolio. Daily redemption opportunities also ensure high liquidity.
“With Credit Suisse (Lux) Fixed Maturity Bond Fund 2020 S-1, we are implementing an established concept that is in high demand among investors. Credit Suisse Nova (Lux) Fixed Maturity Bond Fund 2019 – launched in Q2 2016 – saw inflows of USD 3.3 billion during its short subscription period,” notes Luc Mathys, Managing Director and Deputy Head of Fixed Income at Credit Suisse Asset Management.
The subscription period for this fund ends on September 28, 2016. After this, fund subscriptions are possible with a dilution levy through the end of November. An earlier closing is possible if subscriptions become disproportionately high over time. The fund is approved for distribution in Germany, Austria, Switzerland, Liechtenstein, Luxembourg, United Kingdom, France, Italy, Spain, Netherlands, Norway, Sweden, and Finland as well as Singapore.
Facts on Credit Suisse (Lux) Fixed Maturity Bond Fund 2020 S-1:
- USD B: ISIN LU1457594395
- Broadly diversified portfolio including debt from developed and emerging markets as well as investment-grade and non-investment-grade bonds
- Rating: Investment-Grade-Rating on average
- Investment universe: global, including corporate bonds from emerging markets
- Fund domicile: Luxembourg
- Legal structure: UCITS, SICAV
- Fund currency: main currency USD; EUR, CHF, GBP, SGD, AUD, and JPY share classes available
- Minimum investment: 1 unit
- No performance fee
- Management fee: 0.60% (USD B)
- Maximum front-end load: 5.0%
- Projected total expense ratio (TER): 0.77% (USD B)
- Liquidity: daily
- Subscription period: September 5, 2016 to September 28, 2016 (15:00 CET)
- Inception date: September 28, 2016
- Maturity date: September 30, 2020
- Investments in emerging markets may exhibit a greater degree of risk than investments in developed markets due to less political stability, relatively unpredictable capital markets and economic growth patterns, as well as a financial market that is still at the development stage or a weak economy.
- Some or all of the bonds may default if the issuer defaults or is liquidated.
- The investments are subject to market fluctuation and a reinvestment risk.
- There is no guarantee for the coupon payments or the value of the investments at maturity or at any other time.