Allianz Global Investors (AllianzGI) has announced the launch of its second trade finance fund to offer investors exposure to ultra short-term trade finance receivables, including letters of credit (L/Cs), with investment grade credit risk.

The Allianz Working Capital Investment Grade Fund (ALWOCA IG), builds on the success of a similar fund launched three years ago. The trade finance team at AllianzGI, a subsidiary of German insurer and asset manager Allianz, is managing EUR 500 million (US$512 million) from institutional investors across Europe.

Investment grade risk

The new fund will offer investors exposure to ultra short-term trade finance receivables with investment grade credit risk and will therefore be accessible for a broad range of investors who have restrictions on high yield rated investments but are attracted by the defensive nature of short-dated, diversified, trade finance investments.

With the aim of offering attractive yield and diversification benefits, ALWOCA IG's short interest rate duration allows resets to rising rates whilst its short spread duration and no reliance on capital markets seeks to help reduce volatility in case the credit cycle deteriorates.

Investment areas

The fund will invest mainly in the trade finance areas of documentary credits, payable finance and receivable finance.

Documentary credits as defined by AllianzGI include L/Cs, bills of exchange and trade loans used by companies to finance specific trade flows and payments under commercial contracts.

This article represents the views of the author and not necessarily those of the ICC or Coastline Solutions.