Cayman Islands-based Oxford Advisors Ltd. has started the world's first multimanager fixed-income fund with an insurance wrapper, according to Patrick Harrigan, principal marketing director of the firm.
The Oxford Strategic Income fund, which targets institutional investors outside of the United States, received $400 million in seed money in July from an institution domiciled outside of the United States.
Four managers with four different investment strategies each manage an equal piece of the fund: Colonial Advisory Services, Boston, will manage high-yield fixed income; Eaton Vance Management, Boston, senior secured floating rate bank loans; New York-based Lord Abbett & Co., New York, convertible bonds; and Minneapolis-based Galliard Capital Management, Minneapolis, stable value and synthetic GICs.
Morgan Stanley Dean Witter, New York, has been hired as Oxford's investment consultant to assist with product development, to hire outside managers, to develop strategy and for daily monitoring.
The fund pledges to outperform the five-year U.S. Treasury note by a minimum of 300 basis points and is guaranteed by an insurance wrapper provided by AIG Financial Products Corp.
The stable-value component managed by Galliard also will use a wrapper provided by AIG. According to those involved, this would be the first synthetic GIC for offshore investors.
"This is a way for us to tap into the demand for guaranteed products from non-U.S. investors," said Karl Tourville, managing partner at Galliard.
"We found there was a real need for an alternative fixed-income product where you could produce the gains of the market," Mr. Harrigan said.
Oxford Strategic is expected to have initial listings on the Irish Stock Exchange and The Cayman Islands Stock Exchange by the end of November.