Fund Objective

The aim of the Fund is to achieve a high level of income.

View on Past Performance

September witnessed renewed turmoil in global financial markets as the credit crisis returned to centre stage. Risk averse investors turned to government debt at the expense of corporate bonds.The fund outperformed the benchmark, although it ended lower in absolute terms in the tumultuous conditions. Valuations are now extremely attractive, but investor sentiment is currently overwhelmed by risk aversion and liquidity has frozen as banks have become reluctant to lend to one another.A high degree of single name risk also remains an important factor in the market. For that reason we have a wide spread of holdings to minimise potential setbacks. The portfolio had a neutral duration position. Our focus remains on large well capitalised, well managed names.

Future Expectations

Corporate write-downs are likely to continue as the impact of the financial crisis on the economy spreads. On a more positive note, big declines in food and oil prices should begin to result in slowing inflation at some point. Central banks have taken co-ordinated steps to cut interest rate, which should ultimately benefit corporate bonds. We are overweight in non-government bonds, with valuations at compellingly attractive levels.

Fund Details