The multi-boutique asset management group Thames River has launched a Global High Yield Bond Fund, a UCITS III absolute return vehicle, with a significantly overweight position in the European high yield market.

More than 75 per cent of the global high yield issuance has been in the US but the fund’s managers believe that the European high yield market will outperform the US market over the next few years and have structured the fund accordingly, with 58 per cent allocated to European high yield debt. Around 17 per cent will be invested in the US markets and some 20 per cent in the Asia Pacific region.

In terms of sector positioning, the portfolio at launch is overweight in industrials, financials and consumer companies, with industrials comprising 21 per cent of the portfolio.

The managers are targeting a total return of 10 per cent net of fees with a target volatility of 10 to 12 per cent. They will invest in around 50 holdings with a focus on bottom-up credit selection biased towards credits with good trading liquidity. Bottom-up credit selection will be combined with a macro hedging strategy that aims to protect capital, the firm said.

Following its acquisition by London-listed investment manager F&C in 2010, Thames River is now the funds business of F&C Group.