Corporate bonds have become more
popular in today's volatile investment climate. With global markets yo-yoing on a daily basis and in the midst of a period of low inflation and interest rates, equities certainly look riskier in the short term.
The Threadneedle strategic bond fund, due for launch on November 5, will invest
initially in high-yield
and investment-grade corporate bonds. The fund is also permitted to invest in government stock, supranationals and convertibles but will not be doing this immediately.
The fund will be attractive to investors wanting to steer clear of current turbulence in the equity market. It will also suit those seeking a reasonably high income but who are unwilling to accept the risks associated with investment in high-yield bonds alone.
Although the style of product is far from new, the fund's overriding strength will be its management team. Threadneedle has a 20-strong team of bond fund managers based in London and managed by Robert Stirling. It also claims to have the resources of over 100 bond fund managers around the world.
The fund's manager, Ted Bacon, has possibly the most impressive record. He has 18 years' experience, meaning that he has managed bonds through a full range of market conditions. His lengthy experience will be invaluable if markets stay as they are for a while.
I believe the fund will provide a reasonably high level of income for those looking for an alternative to equities.
It aims to provide a gross initial running yield of 7.5 per cent a year and qualifies for Peps and Isas.
is managing director