A Canadian asset manager is set to launch a short-term bond fund next month. McLean Budden, a Toronto-based asset manager of C$12 billion in fixed income, will launch its MB Short-Term Fixed-Income Fund, according to Peter Kotsopoulos, executive v.p. The fund will invest in Canadian federal and provincial government bonds, with a maximum allocation to Canadian investment-grade corporates of up to 50%, Kotsopoulos said. The fund will run against the Scotia Capital Short Bond Index and will have a target duration of less than three years.
"With money market yields so low, there's a lot of demand for less risky bond funds. Investors seem to want to take on some fixed-income risk, but not to the full degree that a [Scotia Capital] Universe Bond Index fund would," Kotsopoulos said, referring to the Canadian equivalent of the Lehman Brothers Aggregate Bond Index.
Kotsopoulos will head the fund's management team. He said he is targeting institutional investors such as pension funds and endowments, as well as private clients. Kotsopoulos declined to quantify the fund's seed capital but said it would be a mix of assets from the manager and existing institutional clients.
