Fund Objective

To achieve a return in excess of global bond markets.

Future Expectations

At current spread levels, valuations are attractive as we believe the market continues its aggressive assessment of future credit decline. The decelerating US growth environment combined with rising energy and raw material costs will pressure corporate profit margins, but compared to previous cycles, the majority of companies in the high yield universe today have stronger balance sheets and minimalrefinancing needs, which should help mitigate credit deterioration in the current economic downturn. Longer term, we believe current valuations will prove attractive and expect spreads will tighten as current levels overly discount our expectation for defaults. Default rates should increase but remain below average in 2008 due to low refinancing requirements, flexible debt terms and still solid corporate cashflows. Security selection remains critical and we will rely on our bottom-up security selection process to capitalise on dislocations in relative value.

Fund Details