Valletta Fund Management yesterday bucked its conservative fund-offering trend it has employed to date by announcing its first high-yield fund. The fund, aimed at investors looking to inject higher risk into their portfolios by investing in the sub-investment grade bond range and its potentially higher returns, will open to the public on 10 April.

The new product comes about as VFM celebrates the 10th anniversary of La Valette SICAV, the first collective investment scheme licenced by the Malta Financial Services Authority.

Speaking at yesterday’s launch, Bank of Valletta chief executive officer and VFM director Tonio Depasquale explained how the product has been designed to provide investors with a diversified and carefully selected portfolio made up mainly of sub-investment grade bonds.

The fund will be targeting the corporate bond market and will not be investing in government debt. Companies such as British Airways, General Motors and Fiat will be invested in, offering a potential higher yield than traditional bond fund investments, but also with an associated risk.

Addressing the risks associated with the high yield market investments, VFM general manager Kenneth Farrugia explains the fund will be diversified across a number of different sectors and country exposures.

He adds, “This new investment opportunity, denominated in euros, is ideal for investors willing to accept a higher level of risk with the possibility of earning potential higher total returns, by way of income and as well as capital appreciation through investments in the high yield bond market.

“Another important feature of the new fund is that it will aim to distribute its income derived from the underlying investments every three months, when investors may opt to either receive such income or reinvest it in the fund at no additional cost.”

Mr Depasquale elaborated: “This new fund confirms VFM’s resolve to maintain its leadership in Malta by providing investors with innovative investment solutions such as the recent multi manager property fund which had attracted investments amounting to over e23 million over the last six months since its introduction. We hope that this latest fund will be as attractive, or possibly more so, than the property fund.

“The business has grown from strength to strength and today VFM manages four investment companies and administers nine others, which together comprise 42 sub-funds represented by over 44,000 shareholder accounts.”

The fund is to be managed by Insight Investment’s fixed income team, which has a long-standing track record in managing fixed interest portfolios. The fund will benefit from constant, ongoing monitoring and a great deal of expertise, which is being viewed as a prerequisite, given the potentially volatile nature of the fund.

The fund’s investment manager, Craig Abouchar, comments, “Insight Investment is one of the UK’s largest investment managers, having affixed income team which conducts intensive research to select companies with higher yields aiming to take advantage of both income as well as capital growth opportunities. Insight Investment has one of the best-resourced and experienced specialist fixed income teams in the fixed income industry in the UK.”