Investec Asset Management aims to fill a gap in the offshore market with its sterling high income bond fund.
Investing in corporate bonds in the UK and the US is not a unique concept as there are many onshore funds that already do this. But Investec are trying to widen the choice for offshore investors, particularly UK expatriates, who are seeking income within a sterling-orientated fund.
Although the fund will have a UK bias of more than 50 per cent, it will invest in US corporate bonds as well to diversify credit risk. It will hedge back into sterling to reduce the risk of investors being exposed to currency fluctuation. Investec has a good reputation for offshore investments and this funds target yield of 8.5 per cent is good.
It is likely to have limited appeal among onshore investors who would usually use their individual savings accounts (Isas) as a tax shelter. In addition, the expatriate clients it is aiming for constitute a very small percentage of the market.
According to Standard & Poors the Investec sterling high yield bond fund is ranked 59 out of 91 funds based on £1,000 invested on a bid-to-bid basis with net income reinvested over one year to October 2, 2000.