Fund Objective

To provide a stable income.

View on Past Performance

The Fund value at the half year end was split 1% invested in preference shares, 54% gilts, 43% corporate bonds and 2% cash. Of the investment of £5.1m over the half year, £2.8m was invested in government securities and £2.3m in a number of corporate stocks across a range of industries.

Future Expectations

The outlook remains one of continued global economic recovery and rising interest rates. In particular, the US Federal Reserve has moved to counter nascent inflationary presusures by starting to raise interest rates and is expected to move them up gradually to a neutral level of around 3.5% by next year. Other central banks are expected to follow this course of policy action. However, bond yields have already risen substantically in anticipation of this tighter monetary policy stance and current inflation is low. Corporate bonds should benefit from the improved global business conditions, stronger balance sheets and a continued tight supply, in contrast to government bond issueance. On balance, fixed interest markets offer fair value, particularly if inflation concerns prove transitory.

Fund Details