M&G Investments, a UK-based investment manager, is set to launch a new global floating rate fund for retail investors in the UK, effective September 2014.
Dubbed as M&G Global Floating Rate High Yield Fund, the new fund will invest primarily in the $43.9 billion global high yield floating rate note (FRN) market and aims to offer investors protection during a period of rising rates globally.
The floating rate high yield fund will be managed by fund manager James Tomlins, who joined M&G in 2011.
The fund will invest in floating rate high yield bonds on a global basis, focusing primarily on the US and European markets.
It will invest in FRN issuers with below-investment grade credit ratings. This will see investors receiving a higher level of income to compensate for the higher risk associated with below-investment grade credit.
The FRN instruments, which are issued by a diverse group of companies across the US, Europe and emerging markets, are designed to act as a natural hedge against rising interest rates and pay a variable income which resets every three months.
Tomlins said: "We believe that this is the first time that retail investors in the UK and Europe will have access to the high yield floating rate note market through a collective fund. For bond investors concerned about the risk of an increase in interest rates, this fund offers a means not only to protect their savings but also to gain from rising yields."