Against the backdrop of the debt crisis in Europe, which to judge from events of recent weeks, has not abated, Harel Insurance Investments and Financial Services Ltd. (TASE: HARL) unit Harel Pia Mutual Funds Ltd. has launched a new specialized fund that will invest in bonds of the PIIGS countries (Portugal, Ireland, Italy, Greece, and Spain), which are trading at relatively high returns.
The fund will hedge exposure to the euro in order to avoid volatility in the shekel-euro exchange rate as much as possible.
Harel Finance chief investment manager and Harel Pia VP Uri Rabinovich said, "The fund, Harel Pia PIIGS Bonds Foreign Currency Hedge, enables investors to be exposed to bonds of Ireland and Southern Europe, which are traded at relatively high returns. This is a high-risk investment, but it should be remembered that the ratings of most of the PIIGS countries are higher than Israel's. For example, Spain is rated AA, Italy is rated A+, and Ireland is rated A."
Rabinovich added, "The fund could suit investors who want to diversify their bonds portfolio and to increase the potential return of the portfolio, especially in view of the fact that a government bond is usually traded at a lower return, and we believe will continue to be traded at a lower return in the near future, too. A higher return involves higher risk, and anyone who invests in the fund should be aware of this."
Published by Globes [online], Israel business news - www.globes-online.com - on December 6, 2010
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