Royal London Sterling Extra Yield Bond A

A hybrid bond portfolio which includes a large exposure to unrated bonds.

  • 119.30p Price (Inc)
  • 107.57p Price (Acc)
  • 0.00% 0.00%

    Initial charge
  • 0.75% Annual management charge
  • 0.83% Ongoing charges
  • 5.90% Yield

Prices as at 29 April 2005, fund data last updated 21 November 2019

This fund seeks to achieve a gross redemption yield of 1.25 times that of the FTSE Actuaries British Government 15 Years Index, whilst seeking to protect capital. The emphasis will tend to be on lower rated investment grade bonds. Unrated bonds with investment grade characteristics will usually be a feature of the portfolio.

Fund summary

Sector £ Strategic Bond
Structure OFFSHORE FUND
Launched April, 2003
Size £2,152m
Yield 5.90%
Charging basis Income
Dividends paid 28 Feb, 31 May, 31 Aug, 30 Nov

Charges

Initial charge 0.00%
Initial charge via Bestinvest 0.00%
Additional bid/offer spread 0.00%
Annual management charge 0.75%
Ongoing charges figure 0.83%

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Investment process

The Royal investment philosophy is that low profile bonds consistently provide better risk / return characteristics than higher profile ones, consequently more time is spent analysing this part of the market. The return target was chosen on the basis that it is realistically deliverable over the longer term. There is no formal fund benchmark, sector weightings are monitored, but not significantly controlled on the basis that benchmark weightings can add to absolute portfolio risk. There are no formal constraints on the size of an issue - many attractive issues being less than £100m. Although the fund may operate along the yield curve most of the securities held have maturity over 5 years, reflecting the issuer’s requirements. The Royal manage their funds on a team basis; whilst the fund manager is responsible for stock selection, he has to operate within duration, sector and credit quality parameters agreed by the team. He retains the discretion to modify these, but only by a 5% maximum. Dealing is daily.

Manager research

Average monthly relative returns

  • 14/15 0.02%
  • 15/16 -0.01%
  • 16/17 -0.05%
  • 17/18 -0.03%
  • 18/19 0.00%

Bestinvest MRI

  • 3 years 0.00%
  • 5 years 0.00%
  • Career -0.12%
  • 3 years 0.00%
  • 5 years 0.00%
  • Career 24.50%

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

Eric Holt

Holt has worked within the fixed interest markets for over 20 years. As the Head of Credit, he oversees credit analysis for a broad range of bond portfolios. He has a degree in Mathematics from the University of Nottingham and is an Associate of the Institute of Actuaries.

Track record

Eric Holt has 19 years experience of managing mutual funds in this sector. Over this period the average monthly return relative to the benchmark index has been -0.12%. During the worst period of relative performance (from February 1997 - July 2009) there was a decline of 26% relative to the index. The worst absolute loss has been 28%.

Periods of worst performance

Absolute -28.00% (December 2007 - November 2008)
Relative -26.00% (February 1997 - July 2009)

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.

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Top 10 holdings

Data accurate as at 31 August 2008

3.2% Prominent CMBS Funding PLC 2A
2.8% InterGen NV 9.5% 2017
2.5% Channel Link 6mL+125 2050
2.2% Mutual Securitisation Plc A2 7.5873% 2022
2.1% HBOS Plc 9.75% Perp.
2.1% Dragon Finance BV 1 A 1mL+90 13/07/2023
2.0% Enterprise Inns Plc 6.5% 2018
2.0% First Hydro Finance Plc 9% 2021
1.8% Abbey National Plc 10.375% Perp.
1.7% ART BV #113 (Uskmouth)
Source: Royal London.

Portfolio

Maximum deviation from peer group duration would be 20%. The portfolio consists of approximately 100 issues, individual holdings will rarely exceed 2%. Securities will be primarily sterling or euro denominated. Maximum unhedged currency position 25%.

Key Investor Information - Income

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Key Investor Information - Accumulation

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