Morley launches Global Convertibles Fund within its Luxembourg SICAV range

Article date: 28 March 2002

Morley Fund Management’s (“Morley”)International Retail Division, Privilege Portfolio International,launches a Global Convertibles Fund on 9 April 2002. The PrivilegePortfolio- Global Convertibles Fund is a further sub-fund ofPrivilege Portfolio SICAV, its Luxembourg domiciled range ofinvestment funds.

The Privilege Portfolio-Global Convertibles Fund will invest ina diversified portfolio of convertible bonds and preferredconvertible stocks and will be denominated in US Dollars. The Fundwill be approximately weighted 55% in the US, 35% in Europe and 10%in the rest of the world. It may hold up to 20% in warrants,straight bonds and equities and will be measured against the UBSGlobal Focus Index.

The Privilege Portfolio-Global Convertibles Fund will be managedjointly by David Clott, Portfolio Manager, who is based atMorley’s associate office in Boston* and Tom Wills,Derivatives Specialist who is based at Morley’s head officein London. Morley takes an active approach to managing convertiblebonds, drawing on the research skills of its in- house independentanalysis team. Top-down input into the portfolio selection isprovided by the strategy team, whilst bottom up stock decisions aretaken by the Fund Managers within the controls of the dedicatedMorley risk management team.

Commenting on the launch, David Clott, Portfolio Manager atMorley Fund Management, said: "We believe that the convertiblesmarket offers significant investment opportunities for both retailand institutional investors. Since 1973, convertibles in the UShave offered higher risk-adjusted returns than both equities andbonds. Over the same period, convertibles have offered investors upto 70% of the upside of the underlying shares and only 54% of thedownside*.” David, who will lead on US assets in the newfund, currently manages a US convertible bond portfolio that hasoutperformed its benchmark by over 3% per annum in the two yearsunder his management.

Tom Wills, Derivatives Specialist at Morley Fund Management,will lead on European assets in the new fund. He said:“Record issuance in the past two years has raised the marketto over $500 billion, which is a similar size to global high yieldand hedge fund markets. Issuance has been particularly strong inEurope, where a deep and liquid market has developed in the face ofwidespread corporate restructuring. The Global Convertibles Fundwill provide Privilege Portfolio investors with equityparticipation, coupled with downside protection.”

Robert Woolf, Managing Director, Privilege PortfolioInternational Ltd, added: "We believe that in the PrivilegePortfolio-Global Convertibles Fund we have a unique product that isvery much of its time. There are very few mutual funds in Europeoffering access to this exciting asset class for both retail andinstitutional investors. The beauty of Convertible Bonds is thatthey behave like equities in rising markets, trading in line withthe stock to which they are attached, but offer bond-styleprotection if the stock price falls.”

*source: Ibbotson Associates


For further information:

Stephen Roberts, Head of International Retail Marketing
Tel: +352
Fax: +352
GSM: +352 021.265.611

Notes to Editors:

  • The value of an investment in the Privilege Portfolio fundscan fall as well as rise. The investor may not get back theoriginal amount invested.
  • Privilege Portfolio is the Luxembourg domiciled investmentfund of the CGNU Group with 26 sub-funds ranging from lower riskmoney market and bond funds through international and regionalequity funds to more speculative single country and themefunds.
  • Morley Fund Management Limited is the Investment Adviser toPrivilege Portfolio and is a member of the Norwich Union MarketingGroup, members of which are regulated in the UK by the FinancialServices Authority for life assurance, pensions and investments.Morley Fund Management Limited is a CGNU Group company.
  • CGNU plc is the UK's largest insurance group, one of thetop-five insurers in Europe and has substantial positions in othermarkets around the world. CGNU is the world’s seventh-largest insurer based on gross worldwide premiums.
  • CGNU's principal business activities are long-term savings,fund management and general insurance, with worldwide premiumincome and investment sales from ongoing business of more than £28billion, and over £200 billion in assets under management at 31December 2001.

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