Threadneedle Investments is to launch a new retail share class on its UK corporate bond fund which will pay trail commission to IFAs.
Currently, the fund has just one share class – with a front-end charge of 2 per cent and an annual charge of 0.5 per cent – which does not pay any commission.
The new share class, which opens on December 3, will have an initial charge of 3.75 per cent, of which up to 3 per cent will be payable in commission to IFAs. The annual charge will be 0.75 per cent with trail commission of 0.25 per cent.
Threadneedle says the decision to create the new share class followed a number of requests from IFAs who wan-ted to recommend the products to clients. The fund, managed by Ted Bacon, was rec- ently awarded a Standard & Poor's AAA rating.
Threadneedle managing director David Sachon says: “The Threadneedle UK corporate bond fund has a superbly consistent performance record as well as the lowest relative volatility in its sector. The fund's focus only on investment-grade bonds and the risk-averse style of management makes it appealing as a good substitute for gilts in investors' portfolios. With interest rates on deposits as low as they are, this fund has a valuable place as the defensive portion of a client's investment.
“The tax treatment of bond funds also makes them more attractive to many Isa investors than equity-based funds. These factors make bonds very interesting, especially for investors who wish to be more conservative in the current market climate. By creating this new retail share class we are opening the fund to many more IFAs and their clients.”