MARLBOROUGH FUND MANAGERSHigh Yield Fixed Interest FundType: Unit trustAim: Income and growth by investing globally in fixed-interest, variable-rate and index-linked securitiesMinimum investment: Lump sum £1,000Investment split: 100% in fixedinterest, variable-rate and indexlinked securitiesIsa link: YesPep transfers: YesCharges: Initial 5.25%, annual 1.5%Commission: Initial 3%, renewal 0.5%Tel: 0870 757 7205The objective of the Marlborough high-yield fixed-interest fund is to provide a high level of income with the opportunity for some capital growth by investing in mainly fixed-rate, variable-rate and index-linked securities.
Bright Financial Services sales director Paul Breaks thinks the timing of this fund launch is just right. He says: “It offers diversity to an equity portfolio, particularly for income-seekers. But it is at the higher risk end of fixed-income funds and needs to be monitored on a regular basis.”
Breaks says he likes the fact that the fund will be run by Paul Read, who has over 30 years’ experience of running fixed-interest funds. He draws attention to the aim of the fund – to provide a high level of income of around 7.5 per cent net of charges – which he feels is relatively high.
He says: “I agree with the fund manager that the high-yield market is the most attractive part of the fixed-interest spectrum at present. The fund launch comes at a time when there are lots of new issues expected and the fund could do well over the next six to 12 months.”
Considering the potential drawbacks of the fund, Breaks says: “As always with high-yield stock, there is greater risk to capital from defaults. Half of the 1.5 per cent annual management charge is taken from income and half is taken from capital. This helps the income stream but reduces capital.”
When asked which funds are likely to provide the main competition for the fund, Breaks suggests the recently established Old Mutual dynamic fund. He says the Old Mutual fund has a greater reliance on a team approach and offers stiff competition but has a lower yield.
BROKER RATINGSSuitability to the market: GoodInvestment strategy: GoodCharges: AverageRemuneration: AverageOverall 7/10