Pattullo says the move will offer investors greater asset class diversification, as well as a clearer definition on the bond sector.
Pattullo says it will also allow investors to compare a new breed of active bond funds that use the strategic name. However, he does believe an equity cap of 5 per cent would have been more accurate for a fixed income mandate than the 20 per cent figure the IMA has decided upon.
He says: This decision reflects what we have known for some time; that rather than persisting with legacy styles of management, the market wants modern, flexible and innovative asset allocation within bond portfolios that can make better use of Ucits III powers.
“Active bond funds such as the Henderson strategic bond fund have seen significant inflows this year, not only due to the more cautious economic environment, but also from the disappointing returns coming from single sector bond funds – particularly within the investment grade corner of the market. The ability to actively target returns in the better performing sectors, while moving out of underperforming areas, makes a strategic bond fund the complete fixed income solution for investors.