Threadneedle UK Corporate Bond C1

Fund invested in quality UK corporate bonds with very little exposure to high yielders.

  • 65.69p
    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?

  • 3.75% 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!

  • 0.75%
    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).

  • 0.92%
    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.

  • 1.60%
    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 25 September 2020, fund data last updated 14 August 2008

The fund invests primarily in UK investment grade corporate bonds, with some exposure to corporate bonds of companies domiciled in continental Europe. Bonds denominated in currencies other than sterling are hedged back into the UK currency. The aim is to achieve a high level of income from a portfolio of primarily fixed interest investments in the UK and Continental Europe. The fund can be considered as a mainstream, "plain vanilla" corporate bond fund.

Fund summary

Sector £ Corporate Bond
Structure OEIC
Launched July, 1995
Size £1,088m
Yield 1.60%
Charging basis Income
Dividends paid 7 Feb, 7 May, 7 Aug, 7 Nov

Charges

Standard initial charge 3.75%
Initial charge via Bestinvest 0.00%
Additional bid/offer spread 0.00%
Annual management charge 0.75%
Ongoing charges figure 0.92%

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Investment process

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.

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 rated funds within the Corporate Bond sector.

Manager research

Average monthly relative returns

  • 15/16 0.49%
  • 16/17 1.04%
  • 17/18 -0.18%
  • 18/19 0.00%
  • 19/20 0.00%

Bestinvest MRI

  • 3 years 0.00%
  • 5 years 0.00%
  • Career 0.07%
  • 3 years 0.00%
  • 5 years 0.00%
  • Career 75.20%

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

Alasdair Ross

After graduating from New College, Oxford with a degree in Philosophy, Politics and Economics Ross worked for BP plc in a variety of roles. He joined Threadneedle Investment Grade Bond desk in September 2003 as a trainee investment analyst.

Track record

Alasdair Ross has 11 years experience of managing mutual funds in this sector. Over this period the average monthly return relative to the benchmark index has been +0.07%. During the worst period of relative performance (from March 2010 - November 2015) there was a decline of 28% relative to the index. The worst absolute loss has been 15%. Statistically, we estimate the probability that this fund manager is adding value, rather than being lucky, is 75%.

Periods of worst performance

Absolute -15.00% (April 2008 - October 2008)
Relative -28.00% (March 2010 - November 2015)

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 May 2020

2.1% Innogy Finance Bv 6.25% 03/06/2030
1.9% Bacardi Ltd 4.7% Bds 15/05/28 Usd100000
1.7% At&T Inc 4.375% Nts 14/09/29 Gbp1000
1.5% Edf 5.5% Bds 17/10/41 Gbp100000
1.5% Becton Dickinson & Co 3.02% Bds 24/05/25 Gbp100000
1.4% Kraft Heinz Foods Co 4.13% 01/07/2027
1.4% Fidelity National Information Services Inc 3.36% 21/05/2
1.4% Bupa Finance Plc 5% Sub Nts 08/12/26 Gbp100000
1.3% Ge Capital Uk Funding Unltd Co 5.875% Nts 18/01/33 Gbp1000
1.2% Lloyds Bank Plc 7.625% Nts 22/04/25 Gbp1000
Source: Trustnet

Sector breakdown

Medium dated bonds 33.00%
Others 21.00%
Short dated bonds 16.00%
Long dated bonds 12.00%
Long dated bonds 9.00%
Very short dated bonds 5.00%
Cash & Cash Equivalents 4.00%
Money market 1.00%
Others 1.00%

Portfolio

The number of stocks in the portfolio will vary according to levels of conviction. Gilts will occasionally be used to take defensive positions against the market. The average credit rating for the portfolio must be A or higher.

Constraints

Up to 20% of the portfolio may be invested in non sterling issues, all of which will be hedged. Duration is managed within a 10% range relative to the benchmark, the Iboxx Non Gilt Index.

Key Investor Information

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