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RWC is set to launch the Distressed Convertibles fund in January 2009, aiming to benefit from the high return opportunity presented by the undervaluation of global convertible bonds.

Convertible bond prices have fallen significantly in recent months, in line with declines in equity and credit markets.

Forced selling, predominantly by convertible arbitrage hedge funds, has placed additional downward pressure on prices, RWC said.

As a result, convertible bonds have fallen dramatically and offer compelling value relative to equities and equivalent to straight bonds, said Peter Harrison, chief executive at RWC.

The RWC fund will be long only and invest in listed convertible bonds not using convertible arbitrage.

The minimum investment term is two years, which Harrison said was “prudent” to ensure the fund’s liquidity was matched with the opportunities and risks in the asset class.

The lead portfolio manager of the fund will be Miles Geldard, supported by Lee Manzi and Grant Webster.

Geldard and his team have managed the £300m RWC Global Convertibles fund since its launch in early 2007.

For more on this, read next Monday's edition of Investment Adviser.