Fund Objective

The fund’s investment objective is to achieve a high level of income with the potential for capital growth, from investment in a diversified portfolio of sterling denominated fixed interest securities. Investments will include British and other government securities, corporate obligations, Eurobonds, local authority loans, money market deposits and other sterling denominated fixed interest securities. Investment will be in directly held transferable securities. The fund may also invest in collective investment schemes, warrants and money market instruments.

View on Past Performance

The fund delivered strong returns over the month. Although UK inflation levels remain concerning in the near term, the consensus in the market is that once we are over this 'spike', inflation will decline as economic growth continues to wane. This expectation was supportive for the government bond market over August, as was further evidence that the UK economy is likely to fall into recession in the coming months.This outlook infers that the Bank of England is more likely to cut interest rates than raise them, which is normally beneficial for gilts. Moreover, government bonds tend to perform well when economic growth is deteriorating as they represent a relatively safe haven for investors during such times.

Future Expectations

The fund invests predominantly in UK government bonds and aims to deliver a reliable income, coupled with capital growth in excess of bank and building society deposit accounts over an interest rate cycle. The fund could be suitable for an investor either requiring a regular income or steady capital growth generated with low levels of risk. While rising inflation levels remain challenging, we expect that weaker economic growth will support fund performance over the medium to long term.

Fund Details