Royal London Corporate Bond A

A quality corporate bond fund offering above average exposure to unrated bonds.

  • 102.70p
    Price (Inc)

    These are the shares in the fund that pay out an income to clients. The income is made up of the total dividends – the money a company can pay out to its investors – from the companies in the fund.

  • -
    Price (Acc)

    These are the shares in the fund that don’t pay out an income to clients. Any dividends – the money a company can pay out to its investors – are reinvested into companies in the fund. Despite no income, the shares should be worth more over time. Good incentive, eh?

  • 3.00% 0.00%

    Initial charge

    Some funds charge you when you first invest, which is aptly known as the initial charge. They’re usually between 3-5% but at Bestinvest, we usually don’t charge you a penny!

  • 0.90%
    Annual management charge

    This is how much the fund management company charges to run the fund. It’s like paying a babysitter, dog sitter or house sitter (that makes well-informed, heavily researched changes to improve your baby/dog/house when needed).

  • 0.95%
    Ongoing charges

    This stands for Ongoing Charges Figure. It’s the cost of running a fund and includes admin fees, manager fees, administration costs, etc.

  • 2.50%
    Yield

    How much the fund is currently paying out in income to investors. It’s NOT to be confused with the overall growth of a fund – a very different thing indeed. It’s also NOT a guarantee of future pay-outs, just a snapshot. This is more what it’s not than what it is…

Prices as at 24 November 2020, fund data last updated 13 April 2012

The fund seeks to maximise investment return (predominantly income with some capital growth) over the medium to long term from a portfolio consisting predominantly of sterling denominated, quality corporate bonds. The fund sets itself apart from its IA £ Corporate Bond peer group by typically including a higher weighting to unrated bonds / asset backed securities. Traditionally this policy has led the fund to overweight the property, leisure, and investment trust sectors. Bonds issued by major governments and companies will be more stable than those issued by emerging markets or smaller corporate issuers; in the event of an issuer experiencing financial difficulty, there may be a risk to some or all of the capital invested. Any historical or current yields quoted should not be considered reliable indicators of future performance.

Fund summary

Sector £ Corporate Bond
Structure OEIC
Launched March, 1999
Size £1,433m
Yield 2.50%
Charging basis Capital
Dividends paid 31 Mar, 30 Jun, 30 Sep, 31 Dec

Charges

Standard initial charge 3.00%
Initial charge via Bestinvest 0.00%
Additional bid/offer spread 0.00%
Annual management charge 0.90%
Ongoing charges figure 0.95%

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Investment process

An IA £ Corporate Bond peer group fund. The mandate allows for up to 10% to be invested in gilts, otherwise it is largely invested in sterling denominated corporate bonds, exposure to high yield bonds is generally no more than 5%. The fund's headline duration will tend to be close to its reference benchmark (the iBoxx Sterling Non-Gilt All Maturities Index) of about 7 years, although its effective duration maybe less than this. Within the quality corporate bond market, the emphasis will be towards the lower end of the credit spectrum. Credit research is undertaken on a sector basis. The managers have identified the off index, unrated and structured debt markets as a valuable source of portfolio alpha, which has led the fund to traditionally being overweight the property, leisure, and investment trust sectors. In addition, these sectors invariably offer asset security for bondholders.

One of the most competitively priced actively managed corporate bond funds. The fund’s investment focus - significant weighting to BBB credit quality + ABS, off index / unrated bond exposures - generally provides a higher income distribution which is further enhanced by applying charges to the capital account.

Manager research

Average monthly relative returns

  • 15/16 0.00%
  • 16/17 0.00%
  • 17/18 0.00%
  • 18/19 -0.08%
  • 19/20 -0.11%

Bestinvest MRI

  • 3 years 0.00%
  • 5 years 0.00%
  • Career -0.08%
  • 3 years 0.00%
  • 5 years 0.00%
  • Career 9.70%

Performance figures are based on the average of monthly percentage returns relative to the benchmark index.

Jonathan Platt

Platt joined Royal London in 1985 and is now a director and head of the fixed interest team, having overseen the development of the company's fixed interest process. He is responsible for a team which manages a range of bond portfolios for institutional and retail clients of the Royal London Group. He holds an MA in Philosophy, Politics and Economics from Oxford University.

Track record

Jonathan Platt has 2.9 years experience of managing mutual funds in this sector. Over this period the average monthly return relative to the benchmark index has been -0.08%. During the worst period of relative performance (from July 2003 - August 2005) there was a decline of 4% relative to the index. The worst absolute loss has been 4%.

Periods of worst performance

Absolute -4.00% (May 2003 - October 2003)
Relative -4.00% (July 2003 - August 2005)

About the MRI

Our unique indicator: the Bestinvest Manager Record Index (MRI) measures the likelihood that the fund manager is adding value through their decisions. It is based on their performance record over the course of their career, adjusted for the amount of risk taken. MRI is an important contributor to our fund rating system but it is also vital to take account of qualitative factors. It is also very important to select funds to form a cohesive portfolio with an appropriate overall risk level.

Allocation

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Top 10 holdings

Data accurate as at 31 July 2020

1.7546% Aviva 6.875%/ Frn 20/05/58 Gbp50000
1.3861% Hsbc Bank Plc 5.375% Sub Nts 22/8/33 Gbp(Var)
1.3368% Hsbc Bank Plc 4.75% Subord Nts 24/03/46 Gbp50000
1.1888% Thames Water Utilities Cayman Fin 7.738% Bds 09/04/58 Gbp100000
1.1572% Lloyds Bank Plc 6% 08/02/2029
.9585% M&G Plc 5.7% Dated Tier 2 Nts 19/12/63 Gbp100000
.9425% Electricite De France 5.875% Vrn Perp
.9393% Cooperatieve Rabobank Ua 6.91% Vrn Perp
.8834% Axa 6.6862% 2049
.8495% Electricite De France 6% 23/01/2114
Source: Trustnet

Sector breakdown

Corporate Bonds 30.00%
Insurance 16.00%
Financial Services 15.00%
Property 10.00%
Utilities 7.00%
Real Estate 6.00%
Consumer Services 4.00%
Mortgage & Secured Bonds 3.00%
Consumer Goods 3.00%
General Industrials 2.00%

Portfolio

Number of securities: 230. Unrated bonds will account for between 20-30% of the portfolio. Gilts may account for between 0-10%.

Constraints

Max deviation from peer group duration: 20%, individual holdings will not exceed 2% of assets (except gilts).

Key Investor Information

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