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Baillie Gifford fixes interest on bond funds

Scottish fund manager Baillie Gifford has added the investment-grade bond fund to its range of corporate bond funds.

This Oeic was unveiled alongside the high yield corporate bond fund and brings Baillie Gifford&#39s number of fixed-interest funds to four. It offers an income yield of 5.50 per cent a quarter by investing in a portfolio of investment-grade corporate bonds.

The portfolio will focus heavily on the financial and industrial sectors. The financial sector is looking attractive because banks must ensure their credit rating remains high, even during tough economic conditions where other companies are allowing their credit ratings to slip. The industrial sector is also seen as a good prospect as there may be a recovery in areas such as the auto industry, with companies including Ford and BMW.

This Oeic is a lower-risk corporate bond fund which is one step up from the lowest-risk gilt and fixed-interest fund. It is likely to appeal to investors who are looking for a higher level of income than is currently available with building society accounts. They may be reluctant to take the risk of high yielding bond funds but some may prefer a fund which boosts income levels through a small proportion of non-investment grade bonds.

According to Standard & Poor&#39s the Baillie Gifford gilt and fixed interest fund is ranked 44 out of 55 funds based on £1,000 invested on a bid-to-bid basis with net income reinvested over three years to November 30, 2001.

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