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Product Matters

The launch of Old Mutual&#39s dynamic bond fund caught my eye as, unlike many of the funds in this sector, it will move actively between high yield and investment grade although, of course, the minimum level of 20 per cent must be maintained in high yield.

Furthermore, it is that holy grail of incomeproducing funds which pays income monthly, with an estimated income yield of 6.18 per cent.

It will be managed by Theresa Egan, who joined Old Mutual from Newton this year. Egan has over 18 years&#39 exp-erience with high-yield and investment-grade bond asset allocation and will utilise the talents of Old Mutual&#39s strong bond team, including Stephen Snowden and Sofia Skalistiri, to cover all aspects of the fixed-interest market.

Old Mutual&#39s bond has the flexibility to invest between gilts, investment-grade corporate bonds and high-yield bonds. It aims to maximise returns by assessing which asset class will outperform at various stages of the economic cycle and minimising exposure to those areas that are likely to underperform so it could shift to 100 per cent weighting in high yield when that is the area that is perceived to be best value.

Analysis will be made on both a top-down and bottom-up basis. In-depth analysis of the economic conditions and the interest rate cycle will inform the asset allocation across high yield, investment grade, gilts, convertibles, floating rate notes and cash. Stocks are closely scrutinised and risk will be controlled by the diversification of the 40-60 holdings across a range of issuers and sectors.

Juliet Schooling is head of research at Chelsea Financial Services


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