Govett Investments has unveiled the corporate monthly income fund, which invests in fixed interest securities including sterling denominated corporate bonds and UK gilts.
This open-ended investment company aims to provide a combination of capital growth and income with a target yield of 7 per cent a year. It invests in between 50 and 60 corporate bonds mainly in the UK. It will also contain European bonds and can invest a small proportion overseas.
The fund will focus on investment grade bonds and will have holdings such as the media group Pearson and car manufacturer BMW. However, around 20 per cent will go into junk bonds as they are needed to make higher yields possible.
A range of sectors including telecommunications, consumer goods, utilities and property will be covered by the fund and this means that investment risk is diversified.
The fund could fulfil a need for investors who are looking for income during retirement and who may be unhappy at the interest they are getting on their building society accounts after three successive cuts in the Bank of England base rate this year.
According to Standard & Poor's, the Govett Corporate bond fund is ranked 40 out of 83 funds based on £1,000 invested on a bid to bid basis with net income reinvested over three years to June 29, 2001.