SocGen Asset Management has entered the corporate bond fund market for the first time with the introduction of the SocGen sterling corporate bond unit trust.
The unit trust will invest in a portfolio of between 40 and 50 corporate bonds issued by companies that are in the UK corporate bond sector. At least 80 per cent of the fund will be invested in corporate bonds with a rating of BBB and above. The remaining 20 per cent will be invested at the discretion of the fund managers, depending on which areas appear most attractive. However the fund will not invest in junk bonds.
Based in London, the unit trust will be managed by Paul Rayner and Stephen Peirce. Rayner joined SocGen Asset Management in 1998 as an economist and fixed income specialist. He was joined in 2000 by Peirce, who previously worked for Teachers Insurance.
The fund has an initial yield of 5.5 per cent and is aimed at investors who are looking for income. Corporate bonds with a rating of BBB and above offer less attractive yields than funds with a rating of BB or lower. However they are more stable than funds that have lower ratings and this can be attractive when markets are volatile.
The SocGen sterling corporate bond fund fits in well with the other seven funds available from SocGen Asset Management. These include UK growth, technology. European growth, UK income, Japan growth, global managed and stockmarket managed.
According to Standard & Poor's the UK growth fund is first quartile, the UK income and European growth funds are second quartile and the technology and Japan growth are third quartile, based on £1,000 invested on a bid to bid basis with net income reinvested over one year to April 23, 2001.