Fund Objective

investing in high yielding corporate and

View on Past Performance

The turmoil affecting financial institutions intensified as 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. In credit markets, spreads over government bonds widened sharply.According to data from Merrill Lynch, European high-yield spreads increased by 336bps, while investment-grade spreads increased by 97bps. September saw European high-yield bonds post an 11.3% fall in local currency terms, the worst monthly return since June 2001. Equity markets were similarly affected with the FTSE-All Share index falling by 13.2% over the month.UK interest rates were held at 5.0% for the fifth consecutive month and, despite annual CPI inflation rising to the highest level in 16 years at 4.7%, weakening macroeconomic data saw expectations for interest-rate cuts increase.

Fund Details