To maximise total return, while achieving a higher level of income than would be available from investment only in comparable UK Gilts, by investing primarily in a diversified portfolio of investment grade fixed interest securtities denominated in sterling.
Sterling credit markets substantially underperformed the UK gilt market as financial concerns came to the fore once again. The US authorities let Lehman Brothers file for bankruptcy as potential suitors walked away from the institution in the final hours. We had a small position in the most senior bonds of the bank which fell in price as it became clear Lehman was being dealt with differently from Bear Sterns.The Lehman collapse precipitated a widespread re-appraisal of risk in credit markets, the reverberations of which are still being felt. More recently the governments of many nations have now woken up to the risks of allowing their financial institutions to fail and are focused on returning confidence to the market.This varies by market with the US passing the $700bn TARP (Troubled Asset Relief Program) and the Irish extending a government guarantee to all depositors and subordinate bondholders for two years.
79.19p
