Old Mutual Global Investors (OMGI) has said that it will launch an absolute return government bond fund with £100m of seed capital on 7 October 2015.
The fund will be managed by former Ignis fund manager Russ Oxley, who joined OMGI at the start of 2015. He will be supported by co-managers Adam Purzitsky and Paul Shanta.
The fund will aim to deliver positive total returns on a rolling 12-month basis with stable levels of volatility uncorrelated to bond and equity market conditions.
It will target cash plus 5% per annum, the company said in a statement.
It will be diversified from global fixed income markets by employing an investment strategy focused on expressing views on macro themes through exposure to forward interest rates inflation expectations and foreign exchange.
OMGI said the fund will exhibit low correlation with other absolute return investment strategies because of its distinctive process and avoidance of credit and credit-like assets, and of emerging market debt.
Commenting on the launch, Purzitsky said: "Our investment philosophy hinges on the belief that, through a detailed understanding of forward interest rates, it is possible to express views on macro trends in a very precise way.
"Through our approach to investing, we are able to target specific risks and opportunities, without "inadvertently" taking economic exposures to those risks we would rather avoid. We believe we have the potential to deliver positive returns for investors within clearly defined volatility parameters irrespective of the direction of interest rates."