Scottish Equitable International has joined the very small number of companies that provide short term bond funds.
The short term bond fund is a Luxemburg based corporate bond fund which has been aimed at cautious UK investors who might otherwise invest their money in deposit accounts. They can preserve their assets by investing in low-risk products where there is little or no danger to the capital.
Half of the fund will be invested in short term bond funds from UK companies, while the other half will be invested in short UK Government gilts. Short bonds are products that have five years or less until the bonds reach maturity.
By investing in these elements, Scottish Equitable International feels that it is providing a low risk investment, as corporate bonds and gilts are extremely stable and have a very low level of volatility. Although this is a very low risk product it will also have a low level of return and this should be explained to the client.
According to Standard & Poor's the Scottish Equitable International bond fund is ranked 132 out of 239 funds, based on £1,000 invested on a bid-to-bid basis with net income reinvested over three years to August 1, 2000.