Fund Objective

The aim of The T. Bailey Cautious Managed Fund ("TBCMF") is to out-perform the Investment Management Association ("IMA") Cautious Managed Sector Mean (Total Return) via a combination of income and long term capital growth derived from a mix of asset classes.

View on Past Performance

The problem with drafting this factsheet (on 1 August 2007) is that by the time you get to read it (c. 8 August 2007 for those not on holiday) then the world could be very, very different and it will appear either that I am stating the obvious or that we have not got a clue what is going on. With this caveat let me make a few statements about the leveraged loan industry and the expected impact on the markets.The leveraged loan market has helped to fuel the private equity boom that has underpinned equity valuations. This market is now "readjusting" which does not necessarily mean that all M&A activity must cease but just that funding may be harder to come by.Indeed should equity valuations start to falter, corporates (with currently low levels of borrowings) may take advantage, using what one might call traditional debt (rather than the "cov-lite" funding of recent times). This means that some valuations may ease, but probably not plummet.While capital markets are struggling through a period of turmoil and doubt, in contrast the world economy remains in robust shape. GDP growth may be slowing in the US and the UK as higher interest rates rein in the consumer but there is still respectable growth. Any slack is likely to be taken up by the east and emerging markets which are still growing and have less reliance these days on the US consumer.

Future Expectations

Looking at wider markets, as the concerns around credit markets diminish stability and upwards momentum will hopefully follow. With robust world growth even the spectre of rising interest rates should be absorbed by companies - rates may rise but with very low levels of debt (by historical standards) extra financing costs should be more than manageable out of profit growth.

Fund Details