Fund Objective

To provide a return.

View on Past Performance

We maintained our conservative investment strategy throughout the quarter, booking profits in higher yielding bonds that had already performed well, including Pearson (media), Rexam (consumer packaging), Lafrage(building materials) and Travelex, (financial services). ht exposure to the telecommunications sector, acquiring new holdings in KPN and Cable & Wireless, although we still remain significantly underweight in the sector overall. The preference share portfolio remained fairly static, as new convertible issuance remained both subdued and expensive. The outlook for corporate bonds remains positive, as strong demand from institutional investors should continue to support the sector, and interest rate rises in the second half of the year are expected to be limited.

Future Expectations

We believe that lower rated corporate bonds offer the best long term investment opportunities: the additional return (or spread) over gilts adequtely compensates for the associated higher risk, and they should benefit the most as a global economic recovery gathers momentum and corporate earnings improve.

Fund Details