Thames River Capital has introduced a High Income Fund which aims to provide a greater level of income than European government bonds, by investing in the sovereign and corporate debt of emerging markets.
The fund distinguishes itself from similar funds by providing returns in Euros and hedging back into Euros where the assets are dollar-denominated bonds. This is designed to protect investors from fluctuating exchange rates, but many investors are still not keen on the Euro.
Despite a bad couple of months, the yield in emerging markets is quite high, but this is offset by higher risks. The sector is usually associated with growth and could be too risky for investors looking for income. However, the recent correction in technology stocks has made some investors wary of equities and they could be looking to emerging markets as an alternative if they are prepared to take high risks.
According to Standard & Poor's Micropal, Thames River Capital's European fund is ranked 39 out of 216 funds based on £1,000 invested on a bid-to-bid basis with net income reinvested over one year to June 1, 2000.