Donaldson says: “This fund was launched for specialist fixed interest fund manager Gareth Isaac. Gareth previously ran highly rated fixed-income funds at GLG. He is supported by Bob Jolly, who is head of global macro at Schroders and the named alternate manager. In terms of resource they have 100 investment professionals they can call on, including 30 portfolio managers and 30 credit analysts, based around the world.
“This resource means that the fund is a global fund. It is benchmark unconstrained, which means that depending on current views, it can have exposure to sovereign debt – both developed and emerging market – and corporate debt – again both developed and emerging market. In terms of investment grade, it can also hold anything from investment grade through to high yield.
“The fund itself will be at least 80 per cent hedged back in to sterling, which removes much of the currency risk. Derivatives can be used to help limit downside risk, as well as for taking either long or short positions, depending on views. In terms of fixed interest, and being unconstrained, the fund has the tools to respond to market circumstances.
“Fixed income is a very diverse asset class, with different grades and geographies behaving in different ways to market conditions. Using a strategic bond fund means that the choice of being in fixed income has been taken by the financial adviser, but crucially the decision making around which sub-class of fixed interest is left to the fund manager, a specialist in the field.
“By their nature, there will always be fixed-interest funds that outperform strategic bond funds in the short term, as they will at times be invested in the right area. However, over time, because of their diverse nature and hopefully good strategic moves around the sub-classes, there is a good chance that strategic bond funds will outperform over the longer term.
“For those IFAs considering this kind of fund, the fund managers have the pedigree and there is certainly no doubt about the research resource at Schroders. As such, and although a new fund, it is one that is certainly worthy of consideration.”