Norwich Union is expanding its retail fund range with the managed high income fund, an Oeic that invests mainly in corporate bonds.
This Oeic is designed to produce a high level of income through a portfolio of fixed interest securities, including corporate bonds, from around the world. It has a target yield of 7.35 per cent gross a year, which is payable monthly.
UK investment grade corporate bonds make up 40 per cent of the portfolio and are closely followed by US high yield bonds, which carry a 35 per cent weighting. Fifteen per cent goes into European high yield bonds, with the remaining 10 per cent invested in emerging markets. All bonds are benchmarked against the relevant Merrill Lynch index.
The fund is managed by James Gledhill, who joined Norwich Union's sister company, Morely Fund Management, in January 2002 from M&G. He was responsible for M&G's corporate bond fund and high yield corporate bond fund.
Gledhill will draw on Morley's in-house credit research when selecting bonds and will also speak to its equity research team to gain a wider perspective on the credit quality of the companies issuing bonds. Visiting the companies will also form part of the selection process and top-down techniques, such as assessing economic outlook and currency environment, will also be used.
Th fund could appeal to investors who are approaching retirement and looking for a higher level of income than available with building society accounts. However, if interest rates start to creep up, this could cause the prices of bonds to fall.
According to Standard & Poor's, the Norwich Union corporate bond fund is ranked 21 out of 60 funds based on £1,000 invested on a bid-to-bid basis with net income reinvested over three years to April 19, 2002.