Bestinvest says
Until April 2011 management of the high yield corporate bond element of the fund was outsourced to Mackay Shields, who are a firm of New York based fund managers specialising in bonds. Scottish Widows now manage all the investments of this fund, with fund manager responsibility now delegated to Kevin Matthews who is Head of Scottish Widows' US High High Yield team in New York. In accordance with standard Bestinvest policy we removed our two star rating at the time, as the new manager didn't have an identifiable track record. Note approximately 65% of the fund is likely to be invested in US high yield corporate bonds, typically higher risk bonds, which pay higher interest payments. Therefore the fund should be viewed only for the long term or as a small part of a balanced portfolio.
Unusually this fund gains its high yield bond exposure from the US market, with the balance usually invested in UK government bonds, although the fund has scope to invest in and fixed interest securities (bonds) issued by companies and governments operating in the USA and Europe. The neutral fund position is 65% CSFB High Yield Index and 35% Salomon UK Gilt Index. The high yield proportion of the fund is managed on an unconstrained basis relative to benchmark basis. The investment process initially scrutinises the quality of a company's business model to assess their ability to meet interest payments, the availability of asset coverage is also an important factor. The objective being to build a higher yielding portfolio with a margin of safety. The government bond proportion of the portfolio tends to be managed more passively.