Nomura Investment Trust, Tokyo, hired Spectrum Asset Management, Stamford, Conn., as subadviser for Nomura's new investment trust that is managed primarily with a portfolio of U.S. hybrid preferred securities.
Opened to Japanese investors Jan. 31, the mutual fund now has $70 million in assets. Nomura is marketing the fund to retail and institutional investors in Japan.
This is the first mutual fund for U.S. hybrid preferred securities, said Mark Lieb, president and chief executive officer of Spectrum, a unit of United Asset Management Corp. Of Spectrum's total $900 million under management, about half is invested in hybrid preferred stocks, with the remainder in preferred stocks whose dividends fall under the traditional dividend-received (tax) deduction, Mr. Lieb said.
"The product provides not only a high current yield, but also affords good credit quality and low market volatility," Mr. Lieb said. "In addition, foreigners also can avoid paying withholding tax on these U.S. issues," he said.
Since it started in mid-1994, the market for hybrid preferreds has grown to about $70 billion, Mr. Lieb said. Spectrum has invested in the issues since mid-1995.