The private banking arm of UK-listed Lloyds TSB is placing faith in Julius Baer’s absolute return fund and has awarded the wealth manager a £300 million investment.

The fund, started in 2004, has managed a return of 17.35 per cent, bettering the Euribor interest rate return by 1.89 per cent. Aimed the medium term returns, the fund is risk averse and works with a long/short investing strategy.  Diversified along the fixed income markets, investments will include maturities and currencies. Tim Haywood and Daniel Sheard manage the fund.

Lloyds TSB is attracted by the low volatility of the fund as well as regular positive returns. The UK bank, which is acquiring troubled HBOS expects to divert 5 per cent of their future inflows to the fund and have included it in their discretionary portfolio management service.

Stephen Moore, the UK head of sales at Julius Baer’s investment products division, said: “Wealth managers are a key target for us and this win is a great start to our UK business. Lloyds TSB is a prestigious name and the investment is testimony to the fund’s robust investment strategy and proven track record. There is a strong appetite among our target market for actively managed funds which offer low correlation to traditional assets.”