Bestinvest says
This fund is managed by John Pattullo and Jenna Barnard, who also manage the three star rated Preference and Bond and Strategic Bond funds. However, opportunities for capital gain will tend to be limited especially as annual charges are deducted from capital, although investors should expect to receive a steady level of above average income. As such, we would point investors towards our recommended funds within the corporate bond sector where charges tend to be lower.
The fund has a neutral weighting of approximately 65% lower quality bonds and 35% investment grade bonds. Holdings may also include some convertibles and preference shares. Generally bonds will be high coupon due to the emphasise on income generation.
The fund structure is initially approached from a top down perspective (global economic prospects), to form a view of where the best opportunities exist at the sector level as well as setting the tone for the best split between high yield and lower yielding bonds. versus low quality bond split, duration (risk) and sector allocation. The top down analysis covers such areas as inflation, interest rates, supply and demand to the market, relative valuations across different markets, rating agencies' credit ratings and structural changes in industries. Then follows due diligence at the individual bond level.