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PGIM offers high yield bond fund

Ucits fund invests in developed markets with a focus on Europe and applies hedges to mitigate currency risk


David Robinson

PGIM Investments has launched the PGIM Global High Yield Bond Fund.

The fund seeks to identify attractive high yield credits in multiple countries and currencies around the world, is designed to benefit from enhanced diversification and alpha through active regional and currency allocations absent from just US or European high yield.

The fund is run by Robert Cignarella and Jonathan Butler, members of the PGIM Fixed Income Global Leveraged Finance Team.

“As we do not expect the US or Europe to enter recession in the near to medium term, the backdrop for global high yield investing remains favourable. Additionally, global high yield bond spreads are currently attractive, and we expect some tightening over the remainder of the year,” Butler said.

“At the geographic level, the quality on offer in the European high yield market is superior to the US and spreads are wider. On a risk-adjusted basis, we believe the European market offers a compelling opportunity today.

“However, as a smaller market, investors must be aware there is lower liquidity available in European high yield. As for defaults, these have been at record lows in recent years and we do expect this to pick up as the cycle continues. Therefore, active management is going to be increasingly important from here.”

The fund launched last month with $25m (€22.7m) in seed capital. It is a sub-fund of the Irish-domiciled Ucits fund umbrella, PGIM Funds. It will be registered for sale in the UK, Germany, Switzerland and Austria.