Nikko Asset Management (Nikko AM) says it has launched a Corporate Hybrid Bond Fund dedicated to investing in hybrid debt of highly rated corporations. The fund is managed by its London-based Global Fixed Income team and JPY 5.1 billion (EUR 42 million) was raised from Japanese institutional investors, reflecting growing demand for higher yielding quality investment solutions.

Senior High-Yield Analyst and Portfolio Manager of the Fund Richard Kehoe said: ‘'Corporate hybrids have features of both debt and equity securities that can provide an incremental yield advantage relative to senior unsecured debt, which is attractive to our institutional clients.

"We believe this is an area of the market where security selection based on rigorous fundamental research best positions you to capture opportunities in the space."

NAM notes that demand for corporate hybrid bonds has grown significantly since 2013 where issuance has expanded beyond utilities and telecommunications companies to auto manufacturers and energy companies, among others.

It says that corporate hybrid bonds are unique in that they are senior to equities in the capital structure and pay a coupon, and yet share equity characteristics such as no maturity date (or very long maturities) and the issuer may decide not to pay the coupon, similar to a dividend. It adds that their location within the capital structure provides active investors with the opportunity to earn a strong premium.

Says Andre Severino, Global Head of Fixed Income: "The Corporate Hybrid Bond Fund is another progressive solution we are offering our clients where we believe they are being suitably paid for the risk they are taking.

"The strategy was developed for institutional investors in Japan looking to generate positive yields in a negative rate environment and we believe this solution will also appeal to institutional investors throughout Asia and EMEA as well.''

How do I enable cookies in my browser?

Internet Explorer
1. Click the Tools button (or press ALT and T on the keyboard), and then click Internet Options.
2. Click the Privacy tab
3. Move the slider away from 'Block all cookies' to a setting you're comfortable with.

Firefox
1. At the top of the Firefox window, click on the Tools menu and select Options...
2. Select the Privacy panel.
3. Set Firefox will: to Use custom settings for history.
4. Make sure Accept cookies from sites is selected.

Safari Browser
1. Click Safari icon in Menu Bar
2. Click Preferences (gear icon)
3. Click Security icon
4. Accept cookies: select Radio button "only from sites I visit"

Chrome
1. Click the menu icon to the right of the address bar (looks like 3 lines)
2. Click Settings
3. Click the "Show advanced settings" tab at the bottom
4. Click the "Content settings..." button in the Privacy section
5. At the top under Cookies make sure it is set to "Allow local data to be set (recommended)"

Opera
1. Click the red O button in the upper left hand corner
2. Select Settings -> Preferences
3. Select the Advanced Tab
4. Select Cookies in the list on the left side
5. Set it to "Accept cookies" or "Accept cookies only from the sites I visit"
6. Click OK

Nikko Asset Management (Nikko AM) says it has launched a Corporate Hybrid Bond Fund dedicated to investing in hybrid debt of highly rated corporations. The fund is managed by its London-based Global Fixed Income team and JPY 5.1 billion (EUR 42 million) was raised from Japanese institutional investors, reflecting growing demand for higher yielding quality investment solutions.

Senior High-Yield Analyst and Portfolio Manager of the Fund Richard Kehoe said: ‘'Corporate hybrids have features of both debt and equity securities that can provide an incremental yield advantage relative to senior unsecured debt, which is attractive to our institutional clients.

"We believe this is an area of the market where security selection based on rigorous fundamental research best positions you to capture opportunities in the space."

NAM notes that demand for corporate hybrid bonds has grown significantly since 2013 where issuance has expanded beyond utilities and telecommunications companies to auto manufacturers and energy companies, among others.

It says that corporate hybrid bonds are unique in that they are senior to equities in the capital structure and pay a coupon, and yet share equity characteristics such as no maturity date (or very long maturities) and the issuer may decide not to pay the coupon, similar to a dividend. It adds that their location within the capital structure provides active investors with the opportunity to earn a strong premium.

Says Andre Severino, Global Head of Fixed Income: "The Corporate Hybrid Bond Fund is another progressive solution we are offering our clients where we believe they are being suitably paid for the risk they are taking.

"The strategy was developed for institutional investors in Japan looking to generate positive yields in a negative rate environment and we believe this solution will also appeal to institutional investors throughout Asia and EMEA as well.''