Zurich / Frankfurt am Main, October 17 2019
The UI Cape Credit Fund originated in the belief that a new approach was needed to deliver steady returns over the long run in a world of nearly inexistent yields. With inflation trending low and negative yields across the fixed income universe, the markets remain challenging and are causing a loss of purchasing power for traditional investment grade investors. In this setting, the objective of the UI Cape Credit Fund is to offer what traditional bond funds will have a hard time to do after 30 years of falling nominal and real yields: to preserve purchasing power while eliminating pure interest rate risk and FX risks.
The fund’s approach is to invest in high-quality issuers while going down the capital structure to increase the carry while keeping default risk at a very low level. The strategy hereby utilizes a comprehensive set of Investment Grade credit products - across the market and across the different structures - focusing on structural analyses of issuers and bonds, while exploiting technical and fundamental dislocations in the market. The fund generically reduces the pure interest rate exposure to a corridor of 1-2 years, leaving the fund less dependent on the future path of interest rates, while collecting the carry of investment grade credit risk. Any FX exposure is fully hedged.
The UI Cape Credit Fund implements its underlying credit risk using both single names within the liquid large cap credit segment as well as synthetic credit indices. Given the high-quality nature of the available universe, low default rates can be expected over time while ESG criteria play a major role as well. The investment approach of the fund is suitable for those who wish to avoid adverse impacts from interest rate risk but nevertheless seek an attractive current return through credit risk from Investment Grade issuers. As a long-only strategy within the bond universe, the fund aims to achieve a stable carry of 3-month Euribor +200bps over a credit cycle and offers good diversification opportunities within a bond portfolio without a niche character. Cape Capital has a fully-fledged value chain with diligent analysis, research, portfolio- and risk management, execution and distribution capabilities.
The strategy targets pure investment grade credit exposure, while minimizing interest rate risk
Delivering positive current income and carry with a target return of 3-month Euribor +200bps
Sub-fund name: UI – Cape Credit Fund
Portfolio manager: Cape Capital AG, Zurich, Switzerland
Management company: Universal-Investment-Luxembourg S.A., Grevenmacher, Luxembourg
Custodian: State Street Bank Luxembourg S.C.A.
Fund category: Bonds
Fund currency: Euro (EUR)
Subscription fee: Up to 5%
Redemption fee: None
Performance-linked compensation: None
WKN / ISIN: A2PKQH / LU1998188996
Appropriation of earnings: Accumulating
Ongoing charges: 0.5% p.a.
Initial minimum investment: EUR 5,000
WKN / ISIN: A2JQKW / LU1998190208
Appropriation of earnings: Distributing
Ongoing charges: 0.8% p.a.
Initial minimum investment: None
Cape Capital AG is a FINMA-regulated asset manager based in Zurich with a total of 4bn in assets under management. Founded in 2002, we specialize in the active management of investment strategies, including cash, rates, credit, equity and hedge funds. We offer funds through our SICAV-UCITs and SIF platforms in Luxembourg, providing investors with transparent and reliable building blocks for their overall asset allocation framework.
Please visit https://capecapital.com for more information.