Bestinvest says
The management team have successfully managed a similar US mandate since 1995. We believe short dated high yield bonds are ideally suited to the current environment due to a combination of low interest rate sensitivity and reasonably attractive risk premiums. Income levels are also reasonable although not as high as those available from traditional high yield bond funds.
There is no formal reference benchmark for the fund. Short duration in the context of this fund is defined as an average maturity or call option of less than 3 yrs. The nature of the portfolio means it focuses very much on buying securities in the secondary market as opposed to participating via new issues. Market liquidity and bid offer spreads at these maturity points tend to be more attractive relative to the broader high yield bond market. The fund does not invest in floating rate notes of bank loans. The fund manager will manage duration to reflect market conditions; historically the % of the fund invested in bonds of <3yrs to maturity has ranged from 30-70%. Portfolio turnover is driven by a combination of maturity and tender, historically approximately 5% of the portfolio tends to be tendered per month. Overall the fund manager has a bias to companies with stronger operating fundamentals within his investment universe.