Fund Objective

The objective of the Trust is to provide income and capital growth.

View on Past Performance

This month the Trust returned 0.8% while the Index returned 1.4%.The Sterling corporate bond market recovered slightly in December. Corporate bond valuations steadied, assisted mainly by stronger prices of bonds in the Financial sector which, during the last few months, had deteriorated to historically cheap levels.The Gilt market remained well supported across all maturities. As the UK housing market deteriorated further and the Monetary Policy Committee released supportive comments the market began to expect further rate cuts from the Bank of England. The difference between the yield on a corporate security and a Gilt of comparable maturity contracted slightly although spreads on the higher risk elements of the market, from BBB rated issuers, rose by 0.1%.Corporate bonds performed slightly better than Gilts. The excess return, the difference in return from the corporate market and the Gilt market adjusting for differences in the maturity profile of the two markets, was positive by a few basis Redemption Yield# 4.68% points.

Future Expectations

We continue to believe that the market is undervaluing bonds issued by European banks. Consequently, in anticipation of a slow return to more normal trading and activity patterns, we continue to have a high exposure to such issues We have less exposure to issuers from the industrial sectors and lower-quality rated bonds.

Fund Details