Credit Suisse reopened a fixed maturity bond fund due to a significant rate boost and popular demand, raising more than US$500 million from its Asia private banking clients in two months.
APAC private banking clients made up 76% of the new inflows which totalled US$670 million, bringing the fund’s overall AUM to US$1.1 billion.
The fund — Credit Suisse (Lux) Fixed Maturity Bond Fund 2022 S-III — was first launched in September 2017 and was closed for subscription in November 2017 after raising more than US$530 million. It reopened again at the end of May before closing again two months later.
According to Credit Suisse Asset Management, the fund aims to provide clients with “a predictable and attractive risk-adjusted return profile” through a broadly diversified portfolio with a yield-to-maturity slightly above 6%, reduced sensitivity to interest rates with an average maturity of less than three years, and an average rating of BBB (based on linear calculations).
“The genesis of the first fixed maturity bond fund was to cater to clients’ needs for a more stable solution with a payout feature. Such a solution was attractive to clients as markets were volatile and pricing in a global slowdown,” Rodolphe Larqué, APAC head of fund solutions, Credit Suisse Private Banking, told Asian Private Banker.
“This year, the increased volatility across various markets was an opportunity to re-introduce this idea to clients. The timing of the launch was also important following the widening of credit spreads in 2Q2018.”
CSAM’s success with FMPs (fixed maturity plans) in Asia kicked off in 2016, with Asian Private Banker reporting a US$2 billion fundraising within two months by the private banking arm.
Since then, CSAM has raised a total of US$7.8 billion across five FMP solutions.
When asked about the private bank’s choice to opt for FMP solutions manufactured by CSAM rather than third-party providers, Larqué explained that while other asset managers may potentially have similar capabilities, the greater speed of launch from an internal collaboration is critical to optimising yield.
“One of the key success factors of a fixed maturity product is the timeliness in launching the fund,” he said.
“CSAM has a proven track record, not just in managing but the speed in launching these fixed maturity bond funds. Capturing the best possible yields would ensure the longevity and success of these products as these are mostly managed with a buy-and-hold type strategy.”