The Portland, Oregon-based investment management company, which describes itself as “dedicated to the democratization of liquid, alternative investment strategies”, says it plans to launch at the beginning of the New Year, the Bandon Isolated Alpha Fixed Income Fund (ticker: BANIX). The firm says the fund is “a natural product evolution of Bandon’s core mission of making the attractive investment characteristics of alternative investment strategies available to a broader investing population”.
According to the announcement, the fund will seek to provide absolute returns utilizing fixed income instruments. The fund is structured to address the two principal risk factors associated with fixed income investing – Interest Rate Risk and Credit Risk, according to the firm. Unlike long-only bond funds Bandon’s Isolated Alpha Fund will pursue absolute returns by seeking to profit in rising and falling interest rate environments by taking both long and short positions, according to the firm.
The fund will utilize two specialized institutional managers each implementing their strategies in an absolute return fashion:
- Dix Hills Partners, LLC, a $1 billion New York headquartered firm focused on active duration strategies in US Treasury and other sovereign debt markets.
- Logan Circle Partners, LP, an $11 billion Philadelphia headquartered firm focused on absolute return, duration neutral credit strategies.
Bandon notes that mutual funds utilizing hedge fund like strategies are a predominately new, but growing phenomenon in the mutual fund industry with a record $12 billion flowing into the category through August of this year. Additionally, it says that Morningstar has created a new category to capture this trend by creating an Alternative, long-short category currently with 119 distinct funds, 49 of which have been launched post 2008.
“Many investors have recently fled their core fixed income allocations in favor of floating rate investments, high yield bonds, and or dividend paying stocks. We view these as significant asset allocation decisions and are looking to provide a new and innovative option to investors looking to reduce the buy and hold risks within their fixed income portfolios”, said Bill Woodruff, Bandon’s Founder and President.
More information is available at http://www.bandonalts.com.