Rathbones reining in high yields for new strategic bond fund

29 September 2011 | By Joanne Ellul

Rathbones’s new strategic bond fund will not be overexposed to high yield, according to fixed-income director and manager of the fund Bryn Jones.

Last week, Rathbones announced it is launching a strategic bond fund on October 3. It will hold both direct fixed-income securities and collective vehicles in its portfolio.

Half of the fund will typically be held in sterling-denominated government bonds and investment-grade corporate debt while the remainder will be allocated to collective investment vehicles.

The portfolio will be 32.6 per cent in sterling and overseas investment grade and 8.8 per cent high yield.

Jones says: “We think high yield is overvalued. To be fair, I think value is appearing, but I would perhaps prefer to see a solution on the European debt crisis and some improvement in economic data before I consider increasing my position there.”

Jones says the fund will be slightly overweight sterling corporate bonds, slightly underweight gilts, neutral index-linked bonds, underweight local emerging market debt and overweight global government bonds.

It will have a minimum investment of £1,000, an initial charge of 4 per cent and an annual management charge of 1.25 per cent.

The investment team will also include Rathbones head of multi-asset investments David Coombs, who will oversee the collectives section of the portfolio, plus investment manager Will McIntosh-Whyte and credit analyst Noelle Cazalis.

Hargreaves Lansdown senior analyst Meera Patel says: “This is like a part multi-manager product and part corporate bond product. It may work but the proof will be in the pudding as to whether it delivers the return.”

If you enjoyed this article, sign up here to receive daily email updates from Money Marketing and Follow @_moneymarketing