Bestinvest says
Performance of this fund has been steady if not spectacular and arguably the reason for this is partly structural in that it cannot take major risks relative to its peer group and market. That is, duration is limited to a 10% under / over weight relative to the IBoxx Non Gilt Index and additionally the fund will only have a low level of exposure to non investment grade (high yield) bonds. As a rule we generally prefer bond funds with more flexible mandates. Therefore please consider one of our recommended funds within the Corporate Bond sector.
This fund will invest mainly in sterling corporate bonds, although euro and US dollar credits and gilts may on occasion account for a small proportion of the fund. Absolute and relative returns are driven by duration and yield curve positioning (strategic bets), analysis of swap spread levels (effectively the cost of borrowing) and stock/sector selection. There is no hierarchical approach to these performance elements, although in respect to this fund bets are reasonably conservative in that large bets relative to market are not undertaken. This is a team based approach which uses dedicated sector analysts to analyse the underlying bonds. Duration and yield curve views are arrived at following input from weekly economic meetings combined with in house macro-economic (global economic influences) analysis. Swap spread analysis is conducted using a proprietary quantitative model. Credit analysis is a combination of quantitative and qualitative inputs.