Bestinvest says
The OECD government bond and currency markets are amongst the most liquid bond markets. Historically funds that invest in these markets have tended to perform strongly during periods of falling inflation, risk aversion and currency volatility. Whilst this asset class has historically been more sensitive to an increase in inflationary expectations the manager has a number of investment instruments at his disposal which can be used to protect the portfolio.
Although this fund is performance benchmarked against a hybrid index consisting of 50% Gilts and 50% Global Bonds, it will not be constrained by weightings of constituent OECD countries. Portfolio structure is driven by top down macro/currency strategies with an emphasis on value and an awareness of consensus view. Returns are in the form of income and capital from yield curve positioning, duration and currency management. The mandate allows for the aggressive management of these factors to provide for capital preservation.
The management team is of the opinion that, in an economic environment characterised by volatility in international currencies and interest rates, top down management of bond funds will assume a greater significance, not only to protect investors' capital but also to take advantage of mis-pricing opportunities. The mandate terms also provide the managers with a much wider opportunity set to drive total returns within the sovereign debt markets. Currency decisions are made independent of yield curve decisions.