Aim: Income and growth by investing in UK investment-grade bonds, high-yield bonds and international fixed-interest securities
Minimum investment: Lump sum 1,000, monthly 50
Investment split: 100% in UK investment-grade bonds, high-yield bonds and international fixed-interest securities
Isa link: Yes
Pep transfers: Yes
Charges: Initial 3.5%, annual 1%
Special offer: Initial charge reduced to 3%
Offer period: Until May 31, 2005
Commission: Initial 3%, renewal 0.5%
Tel: 0800 414181
The Fidelity sterling bond fund is an Oeic which invests in UK investment-grade bonds, high-yield bonds and international fixed-interest securities.
Capital Trust Financial Management partner Bruce MacFarlane thinks this is a strange time for Fidelity to introduce a bond fund. He says: “The sterling bond fund aims to provide investors with a relatively high income from a portfolio of predominantly investment-grade bonds and is therefore relatively low risk.”
However, MacFarlane says the fund would hold little interest to Capital Trusts clients in the current economic cycle because it is possible to get a better return from cash deposits without any risks or costs.
He says: “There is nothing about this particular fund that I dont like – indeed if I wished to purchase a bond fund Fidelity would be on the buy list. In general, I dislike all bond funds at this current time in the economic cycle and prefer cash or near cash alternatives.”
MacFarlane considers the Fidelity literature as excellent says the adviser remuneration and charges are all as expected with this sort of fund. He thinks the fund will be attractive when wrapped in an Isa.
Discussing potential competitors, MacFarlane says: “All corporate bond funds which are skewed towards investment-grade bonds will be in competition. I believe that cash deposits in the short term will provide competition against investment-grade bond funds where returns are actually greater without any risks involved.”
Suitability to market: Average
Investment strategy: Average
Adviser remuneration: Average