Citywire Selector – For Professional Investors
Fund house says ultra-short duration, fixed income product has arisen as a surprisingly strong sanctuary for traditional investors.
Allianz Global Investors’ dedicated trade finance fund has accrued more than €500m in the three years since inception, with the asset manager targeting more than €1bn in commitments as investors look for new sources of income.
The fund, which is known as Allianz Working Capital (ALWOCA), is an ultra-short duration, open-ended credit strategy that focuses on financing the working capital and commercial trade contracts for a variety of businesses.
Institutional investors have underpinned allocations to the fund so far, which AllianzGI moved into an investible format in April 2019. It can now invest in contracts including invoices, receivables backed loans, factoring, documentary credits, notes, bonds and other instruments.
Citywire A-rated David Newman, who is head of global high yield, said the strong support for trade finance shows how investors have sought out new ideas during a period of intensifying inflation, rising rates and wider market volatility.
‘Given that global demand for trade finance despite the pandemic and the invasion in Ukraine has grown significantly, institutional investors can play an important role to bridge this trade finance gap while aiming to generating stable returns,’ he said.
AllianzGI said the goal is to build a diversified portfolio across trade finance products, sectors, countries and company sizes. This, with an average credit quality of the portfolio using long-term unsecured ratings, is comparable to a BB rating.
Newman’s team runs the strategy with a 90-day maturity profile, which allows it to navigate volatile markets and a rising interest rate environment. The fund has not experienced a single default in an issuer since inception, Newman added.
AllianzGI is offering a broad range of investment solutions and manages about €93bn in private market assets.
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