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Threadneedle sews up split bonds

Threadneedle Investments has added the Threadneedle strategic bond fund to its stable of bond funds.

This open-ended investment company (Oeic) will invest in a diverse portfolio of corporate bonds, from investment grade bonds through to high yielding junk bonds. The initial target yield is 7.5 per cent gross, but this could vary because the proportion of investment grade bonds and junk bonds will shift in response to what is happening in the economy.

The fund will draw on the expertise of two fund managers. Ted Bacon, who currently manages the Threadneedle corporate bond fund, will pick the investment grade bonds in the portfolio. He will be assisted by Barrie Whitman, who runs the Threadneedle high yield bond fund and is responsible for identifying the high yielding bonds for the new fund. The existing bond funds concentrate on either investment-grade bonds or high-yielding bonds and the strategic bond fund differs from them in its combination of both type of bond.

There is currently a great deal of interest in bond funds as they are producing higher returns than investments in stocks and shares. The strategic bond fund would suit investors who are looking for a general bond fund, but they should be aware that the composition of the portfolio is fluid so the risks will fluctuate in line with this.

According to Standard & Poor&#39s, the Threadneedle UK corporate bond fund is ranked 20 out of 60 funds based on £1,000 invested on a bid-to-bid basis with net income reinvested over three years to October 8, 2001.

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