The Fulcrum Income Fund is a Ucits-compliant UK Oeic due to be released in October, subject to regulatory approval.
It will be run by the asset manager’s 27-strong research team, including Fulcrum chief executive, Andrew Stevens, and chief investment officer, Suhail Shaikh.
The fund is aiming to preserve investors’ capital with a target of less than half the volatility of equities. The annual return target is 4.5% above the Bank of England base rate, regardless of market conditions, and the target volatility is 3-10%.
Fulcrum said the fund will invest in a global portfolio of assets, including global equities, credit, government bonds, Reits, liquid alternatives, currencies and commodities. Additionally, it will use discretionary dynamic hedging to protect against market downturns and equity index options to generate income.
Low yield concerns
Nabeel Abdoula (pictured), partner at Fulcrum, said the fund had been launched to meet investors’ desire for low-risk income in the current low yield environment.
"We are not saying avoid all traditional assets; we are saying that they are part of the solution, but not the whole solution.”
He added investors have been driven further out the risk spectrum to achieve income because the yield on traditional assets has been so low.
“A portfolio seeking a 3-4% income 10 years ago would have been a very different one to today in terms of the risk characteristics you expose yourself to,” he said.
“That is not necessary,” he added. “If you give yourself the flexibility to have a balance between achieving the total return objectives in the best way and finding innovative alternative solutions to formulate the income, then you can strike a balance that avoids skewing your portfolio to assets that are risky.
“The ability to combine traditional sources with alternative sources of income enables us to deliver stable income over time without going too far down the risk spectrum. We are not saying avoid all traditional assets; we are saying that they are part of the solution, but not the whole solution.”
Earlier this month, Fulcrum announced it had hired Aviva Investors’ Marc Semaan for its multi-asset team.