Fund Objective

To achieve a high level of monthly income while seeking to limit capital volatility by investing primarily in a diversified portfolio of investment grade and sub-investment grade corporate bonds denominated in sterling or hedged back to sterling. The Fund may be invested in other assets, including derivatives, for either investment or hedging purposes.

View on Past Performance

The sterling corporate bond markets suffered one of their worst quarters on record as bond prices declined aggressively in September. Bank bonds suffered the worst in the crisis but many other companies have also seen significant increases in their cost of borrowing. The Fund is underweight in the higher yielding companies but this did not help us avoid the bank failures in the month - our position in Bradford & Bingley has not performed as hoped and has been sold at a much reduced price.

Future Expectations

We are now beginning to see the consequences of the banking crisis impacting the industrial economy and the realisation in European governments that something must be done to help the banks. Depending on the success of those government initiatives, this may well lead to a long and/or deep economic slowdown. We are trying to remain vigilant with this scenario in mind.

Fund Details