Type: Unit trust
Aim: Income and growth by investing globally in fixed interest, variable rate and index-linked securities
Minimum investment: Lump sum 1,000
Investment split: 100% in fixed interest, variable rate and index-linked securities
Isa link: Yes
Pep transfers: Yes
Charges: Initial 5.25%, annual 1.5%
Commission: Initial 3%, renewal 0.5%
Tel: 0870 757 7205
The objective of the Marlborough high yield fixed interest fund is to provide a high level of income with the opportunity for some capital growth by investing mainly fixed, variable rate and index-linked securities.
Bright Financial Services sales director Paul Breaks thinks the timing of this fund launch is just right. He says: “It offers diversity to an equity portfolio, particularly for income seekers. But it is at the higher risk end of fixed income funds and needs to be monitored on a regular basis.”
Breaks likes the fact that the fund will be run by Paul Read, who has over 30 years experience of running fixed-interest funds. He draws attention to the aim of the fund to provide a high level of income of around 7.5 per cent net of charges which he feels is relatively high.
Breaks says: “I agree with the fund manager that the high-yield market is the most attractive part of the fixed-interest spectrum at present. The fund launch comes at a time when there are lots of new issues expected and the fund could do well over the next six to 12 months.”
Considering the potential drawbacks of the fund Breaks says: “As always with high-yield stock there is greater risk to capital from defaults. Half of the 1.5 per cent annual management charge is taken from income and half is taken from capital. This helps the income stream but reduces capital.”
When asked which funds are likely to provide the main competition for the fund Breaks suggests the recently established Old Mutual dynamic fund. He points out the Old Mutual fund has a greater reliance on a team approach and offers stiff competition, but has a lower yield.
Suitability to the market: Good
Investment strategy: Good