Tuesday, August 26, 2014
GAM launches GAM Star MBS Total Return Fund
- The GAM Star MBS Total Return Fund offers investors an actively managed portfolio of mortgage backed securities (MBS) assets, primarily agency and non-agency US RMBS
- The fund is the regulated, UCITS-compliant version of an investment strategy with an outstanding 12-year performance track record
- The US MBS market offers attractive, consistent returns relative to other high quality fixed income assets
- Broad industry expertise, demonstrated by a team that has successfully navigated a number of different market, interest rate and credit cycles, including both rising and falling interest rate environments
GAM, the independent active investment manager, has launched the GAM Star MBS Total Return Fund – a UCITS-compliant version of a proven institutional investment strategy. The fund invests in the US asset-backed securities market, mainly in residential MBS, issued both by US government agencies and by non-agency entities. In the current environment, the fund aims to deliver returns of the three-month Libor rate +4 to +6% per annum.
The GAM Star MBS Total Return Fund invests in MBS of all maturities: interest rate risk is actively managed in line with the team’s macroeconomic outlook. The fund is managed by Gary Singleterry and Tom Mansley who joined GAM in June 2014 as part of an acquisition. They have approximately 60 years’ combined experience in MBS, including successfully managing dedicated MBS mandates for US institutions since 2002. During this time, Gary Singleterry and Tom Mansley have achieved an average annual return of 13.7% while the benchmark returned 4.8%*. Additionally, their managed account composite delivered positive returns in every calendar year.
With the launch of this fund, GAM is adding to its successful specialist fixed income investment offering. It already manages assets of approximately USD 2 billion in the GAM catastrophe bond strategy and around USD 1.5 billion in the GAM Star Credit Opportunities family of funds.
Tom Mansley said: “The US market for mortgage-backed securities has been in a slow recovery mode over the past six years. It constitutes a highly liquid, diversified market with USD 7 trillion in assets and accounts for more than 30% of the US fixed income market. Our experience shows that the asset class is suited to virtually every stage of the economic cycle. We believe that in addition to careful security selection and portfolio construction, the key to successful investing lies in anticipating and positioning for changes in the interest rate, prepayment and credit environment.”
Craig Wallis, Global Head of Institutional and Fund Distribution at GAM, said: “In the current environment of yield compression in so many fixed income assets, we are seeing growing client interest in more specialised forms of fixed income. Many investors overlook the MBS asset class despite it being an interesting form of fixed income with an attractive risk/reward profile. Active managers can add value versus the market, and the approach applied by our team has proven to deliver consistent returns and capital appreciation for the highly discerning US institutional client segment over many years. We are pleased that our UCITS fund now makes these skills accessible to a much broader group of investors worldwide.”
* The JP Morgan MBS index, performance from 30 September 2002 – 30 June 2014, net of fees.