The fund aims to provide income and capital growth.
Investment policy and strategy
Core investment: At least 70% of the fund is invested in sterling-denominated bonds issued by companies.
Other investments: The fund also invests in bonds issued by government bonds (usually of developed countries), high yield bonds and cash or assets that can be turned into cash quickly.
Use of derivatives: Derivatives may be used to invest indirectly in core and other investments. They may also be used to reduce risks and costs and to manage the impact of changes in currency exchange rates on the fund’s investments.
Strategy in brief: The fund manager has the freedom to decide which investments to hold in the fund, based on his assessment of a combination of macroeconomic, asset, sector and stock-level factors. Spreading investments across issuers and industries is an essential element of the fund’s strategy and the manager is assisted in his selection of individual bonds by an in-house team of analysts.
Risks associated with the fund
The value of investments and the income from them will rise and fall. This will cause the fund price, as well as any income paid by the fund, to fall as well as rise. There is no guarantee the fund will achieve its objective, and you may not get back the amount you originally invested.
The fund may use derivatives with the aim of profiting from a rise or a fall in the value of an asset (for example, a company’s bonds). However, if the asset’s value varies in a different manner, the fund may incur a loss.
The fund manager may use derivatives with the aim of producing a capital gain if interest rates rise (normally, if interest rates rise, the capital value of fixed income securities will fall). However, if interest rates fall, the fund may incur a loss.
The value of the fund may fall if the issuer of a fixed income security held is unable to pay income payments or repay its debt (known as a default).
Where market conditions make it hard to sell the fund’s investments at a fair price to meet customers’ sale requests, we may temporarily suspend dealing in the fund’s shares.
Some transactions the fund makes, such as placing cash on deposit, require the use of other financial institutions (for example, banks). If one of these institutions defaults on their obligations or becomes insolvent, the fund may incur a loss.
The Fund allows for the extensive use of derivatives.