This new bond fund offers investors attractive returns with low levels of risk, according to a bank statement.

It will be open for subscriptions for a limited time at the initial $5 per unit.

At a time when investors are cautious about riskier asset classes, the launch of a fixed income fund meets a vital and critical need in the market.

The NBAD Cautious Income Fund is an open-ended, actively managed product with an expected yield target of five percent based on current market conditions.

Any income will be distributed semi annually, the bank said.

It is open to institutional and personal investors who can invest as low as $500 either through lump sum or regular savings plans.

Fixed Income team at NBAD's Asset Management Group delivered over 9 percent returns for its unconstrained institutional clients in 2011, despite tough conditions in financial markets.

NBAD achieved this high return by astutely investing in UAE and GCC bond markets, a selection based on internal research and investment process.

The returns have been delivered in a very low risk fashion with portfolios displaying lower volatility than even three to five year US Treasuries.

The NBAD Cautious Income Fund invests in a range of bonds and money market instruments predominantly in the UAE and wider MENA region.

NBAD's Asset Management Group, the fund manager, will diversify the fund by paying close attention to risk minimization. It would include government and government-related entities as well as select corporations that fit the Fund's profile.

The offer period closes on Feb. 27. Thereafter the fund will be available at the weekly NAV price, subject to market movements.

"The NBAD Cautious Income Fund is set to become a flagship fund for NBAD," said Alan Durrant, the NBAD group chief investment officer and general manager of Asset Management Group.

“We have built a terrific fund management team as evidenced by the plethora of awards we have recently received. Our fixed income team has delivered strong returns for institutional clients in 2011 and I am delighted that these skills are now available for everyone to access through this fund,” said Durrant.

NBAD's Asset Management Group (AMG) is one of largest asset managers in the region with AED5.2 billion under its management.

It has recently been awarded Best Asset Manager in the UAE by Global Investor magazine, and the Best Investment Product Award by Banker Middle East magazine for its GCC's first Exchange Traded Fund (ETF), 1UAE share.

"Many investors today are faced with low returns on cash deposits, which with rising prices translates into a negative return on cash. The NBAD Cautious Income Fund diversifies portfolios and is targeted for investors who want to enjoy higher income whilst retaining the flexibility to access their investment on a weekly basis," said Mark Watts, the Head of Fixed Income at NBAD's Asset Management Group.

"Across the GCC and the wider MENA region governments and corporations are investing heavily in expanding and improving infrastructure, which is mostly financed by bonds. As a result, this has created an unprecedented opportunity for investing in fixed income instruments that are based in the region. This is a great product for investors with a low tolerance for risk allowing them to capture higher returns without taking undue risk. Furthermore, it helps diversify any investment portfolio."