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Gartmore going for the right blend

Gartmore has unveiled the Gartmore monthly income fund, a unit trust

that aims to produce income of 7.5 per cent a year.

The fund will initially invest 70 per cent in high-yield bonds and 30

per cent in investment-grade bonds, the aim being to balance high

income and the preservation of capital.

The proportion of bonds within the portfolio can be varied in line

with changing economic conditions, but it is expected that the fund

will favour BB-rated bonds, which occupy the middle path between risk

and reward.

Eran Peleg, who manages Gartmore&#39s corporate bond and high-yield

corporate bond funds, will run this fund. Gartmore will use agency

ratings such as Standard & Poor&#39s but its researchers will also

visit companies before applying their own credit ratings.

Investors unhappy with income from building society accounts may look

to bond funds as an alternative. Within the present climate, there

are plenty of buying opportunities, especially among high-yield

bonds. But the success of this fund will depend on the accuracy of

risk assessment and the right blend of bonds.

According to Standard & Poor&#39s, the Gartmore corporate bond fund

is ranked 15 out of 57 funds based on £1,000 invested on a

bid-to-bid basis with net income reinvested over three years to

January 11, 2002.

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