Fund Objective

There is no fund objective available from this fund manager.

View on Past Performance

The Fund returned 0.83% compared to benchmark return of -0.06% (please note that the benchmark changed from Salomon Eurosterling AA- or better to FTSE Gilt All Stock in November 2003) from 15th May 2003 to 15th May 2004. The value of government bonds fell over the third quarter of 2003. Long awaited signs of economic strength caused a sharp sell off in government bonds in July. They then fell for a third month in a row in August, being pulled down by a dramatic fall in the value of Japanese government bonds. However, a strong rally took place in September as a result of concerns over weaker economic data in the US raising concerns over a jobless recovery. Over the quarter, the Citigroup World Government Bond Index returned -0.77%.

Future Expectations

GDP is expected to grow 3.1%, from 2003's 2.8%. Important determinants 1) Household spending and 2) housing data. Consumption - expected to be supported by low interest rates (by UK historical standards) and zero output gap which essentially leaves the UK in close to full employment. House Prices - expected to moderate to 10+% growth. The Bank of England is rightfully concerned about debt and housing prices. Compared to the early 1990's, personal debt/post tax household and income 118% (vs 90% in early 90s). Inflation is expected to rise. Monetary policy we expect rates to rise by another 50 basis points to end at 4.50%.

Fund Details