Aim: Income and growth by investing globally across fixed income markets
Minimum investment: Lump sum £1,000, monthly £100
Investment split: 100% globally in fixed income securities
Isa link: Yes
Charges: Initial 3.5%, annual 1%
Commission: Initial 3%, renewal 0.5%
Tel: 0800 727 770
The JPM strategic bond fund aims for income and growth by looking for the most atractive returns from across the fixed income spectrum, giving it the flexibility to switch into different pockets of opportunity when market conditions change.
Chelsea Financial Services managing director Darius McDermott says: “Locking horns with the likes of Henderson and Aegon, JPM has brought a new offering to the strategic bond sector. JPM Strategic Bond, is managed by the highly regarded Bob Michele who joined the company last year from Schroders, as part of JPM’s strategy to beef up their fixed income proposition.”
McDermott points out that this fund will be run using a best ideas strategy, with Michele plucking what he sees as the most interesting concepts from across the global fixed income spectrum. “The real strategic element of this fund lies in its ability to gain potential exposure to high-risk areas. The fund can invest in emerging markets as well as currency; and mortgage and real estate areas. Michele can also look outside the sphere of investment grade and size up opportunities in non-investment grade and unrated stocks,” says McDermott.
McDermott considers this a flexible strategy which should vary yield. Charges are lower than the majority of the competition in his view, with an annual management charge of 1 per cent. “Michele aims to outperform the Merrill Lynch GBP Broad Market index by at least 3 per cent each year, gross of charges. The tracking error is 3 to 7 per cent,” he says.
A strategic bond fund is a good diversifier in McDermott’s view, and he feels this fund has some muscle in terms of flexibility. “At some point defaults may become an issue in the UK and that could have a big impact on UK corporate funds. In this scenario, this fund’s global remit will offer some protection to portfolios,” he says.
McDermott thinks it is far too early to tell whether Michele has unearthed the best ideas from the fixed income landscape, but says he has a solid background and has joined a good bond stable in JPM. McDermott concludes: “Competition is stiff, but this is certainly one to watch.”
Suitability to market: Good
Investment strategy: Good
Adviser renumeration: Average