Bestinvest says
OECD government bond and currency markets are amongst the most liquid markets. Historically these funds have tended to perform strongly during periods of falling inflation, risk aversion and currency volatility. Whilst the manager can take steps to reduce the potential negative impact of an increase in inflationary expectations on the fund, generally the fund will tend to struggle more under these conditions.
The trust invests primarily in top quality foreign government stock and UK corporate debt with a credit rating above AA, with a particular aim to generate sterling returns superior to those from UK gilts. Foreign currency risk is part of the diversification process with strategic hedging into sterling. Value addition emphasises the use of portfolio duration, yield curve positioning and exploiting credit spreads as well as astute asset allocation and currency overlays.