UK-based investment house Schroders is to launch a strategic bond fund to be managed by Gareth Isaac as senior portfolio manager, with the support of the firm’s head of global macro, Bob Jolly, as alternate manager.

Once regulatory approval is secured, the Schroder Strategic Bond Fund will invest in a range of fixed income markets globally, holding government bonds and both investment grade and high yield corporate debt from developed and emerging markets. Isaac is further mandated to use derivatives to limit downside risk and 80 per cent of the portfolio will be hedged back to sterling.

The fund’s launch is a response to investor demand for access to alternative fixed income investments amid the continuing low interest rate environment and unattractive yields on government bonds. Earlier this week Enzo Puntillo, head and chief investment officer at Swiss & Global Asset Management, warned that investors face negative real yields on many governments’ bonds due to countries issuing them with nominal yields which are lower than the current rate of inflation.

“We currently see fantastic value in good quality corporate and high yield issuers as a part of a balanced fixed income portfolio,” said Isaac, who joined from GLG last year.