Rothschild Asset Management is adding the monthly income fund to its range of five arrows global investment funds.
This open-ended investment company is aimed at investors who are looking for high levels of income by investing in a portfolio of investment grade and non-investment grade bonds. At least 50 per cent of the portfolio will go into investment grade bonds. In terms of geographical weightings, UK corporate bonds are the dominant force, comprising of 43 per cent of the portfolio. Smaller proportions are invested in Europe, emerging markets and North America.
The fund has a target yield of 8.8 per cent a year. It has two share classes — A shares and N shares. The difference between them lies in the charging structures. A shares have a higher annual management charge and they also have an initial charge, which the N shares do not. However, N shares have an exit charge which reduces from 5 per cent in year one to 1 per cent in year six.
Corporate bond funds that invest entirely in investment grade corporate bonds are unlikely to achieve the high levels of income that some investors require, but investors may also be unwilling to take high risks.
The Rothschild fund could be of interest to investors who want to follow the middle path between risk and high reward. They may feel the geographical split provides a solid UK foundation with the diversity of other regions. However, in the current climate of worldwide economic uncertainty, some may still be wary of investment risk.
According to Standard & Poor's the Rothschild Five Arrows global fixed interest portfolio is ranked 28 out of 35 funds based on £1,000 invested on a bid-to-bid basis with net income reinvested over three years to September 10, 2001.
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