Fund Objective

Aims to provide a balance between security and total return.

View on Past Performance

Fixed income markets saw widespread volatility as the turmoil affecting financial institutions intensified. Lehman Brothers filed for bankruptcy protection, the US Treasury effectively nationalised Fannie Mae and Freddie Mac, and Lloyds TSB agreed to buy HBOS. The US$700bn rescue plan proposed by the US Treasury was rejected by Congress causing further extreme levels of volatility.UK interest rates were held throughout the third quarter. Policymakers now appear willing to look past the current spike in inflation and concentrate instead upon the growing downside risks to growth, freeing the way for future interest-rate cuts.Although the risk of default on financial bonds has increased, for example, Lehman has defaulted and the Fed's loan to AIG ranks senior to the bondholders, if anything, the turmoil has led to an acceleration of the credit-friendly trend.

Future Expectations

With valuations of financials at attractive levels and monetary and fiscal authorities now galvanised into taking action, we continue to believe that they offer value on a medium-term basis.

Fund Details