Investec Asset Management has introduced the Investec monthly high income fund, its first high yielding corporate bond fund for UK investors.
The fund aims to generate monthly income, currently at the rate of 9.75 per cent a year, by investing in a mixture of UK and European corporate bonds. It will hold a high proportion of B-rated and CCC-rated bonds, with smaller amounts invested in higher quality A-rated and BBB-rated bonds. The bonds will cover a range of areas, but no more than 20 per cent will go into each sector and investments in each company is limited to 3 per cent.
Michael Markham will run the fund. He joined Investec in March 2001 from Invesco GT, where he was responsible for the European high yield bond fund. He will pick stocks using a top-down approach initially, then the individual companies are scrutinised from a bottom-up basis in terms of credit analysis, strengths and weaknesses.
Tough economic conditions has pushed up yields and this may be a good time for income investors to take the plunge, because yields could fall back as the economy improves. This fund would suit medium-risk investors and since the fund manager will not go for income at any price, the yield investors receive may not be as high in future years.
According to Standard & Poor's the Investec sterling bond fund is ranked 43 out of 57 funds based on £1,000 invested on a bid-to-bid basis with net income reinvested over three years to January 18, 2002.