Fund Objective

The Fund aims to generate an attractive and consistent level of income compatible with a strong culture of risk control.

View on Past Performance

Corporate bonds suffered an exceptionally tough month. The shock failure of 153-year-old investment bank Lehman Brothers destroyed investors' strongly-held faith in the concept of 'too big to fail.' Lehman's collapse was swiftly followed by the forced sale of Merrill Lynch, the government rescue of insurance giant AIG and then the collapse of Washington Mutual. The US government hurriedly put together a plan to remove as much as $700 billion of bad debt from the system.However, they were unable at their first attempt to get the plan passed by Congress, and this saw corporate bond markets experience unprecedented falls. Since then, the rescue plan has een passed, but many more financial institutions in the US and Europe have run aground or sought government rescues. Risk aversion has now reached unprecedented proportions. During September our focus has been on selling those bonds most likely to experience difficulties weathering the economic instability.

Future Expectations

Given the lack of confidence in markets globally, we believe that risk markets will undergo further periods of volatility. While we remain cautious, arguably there is now some value to be found, but we will continue to monitor the situation carefully.

Fund Details