Excellent first year for RLAM's "best ideas" bond fund

The Royal London UK Strategic Bond Trust has enjoyed a very strong first year since it launched on 29th September 2006, achieving its outperformance target of 2.5% in excess of the iBoxx Sterling Non-Gilts All Maturities Index benchmark.

Managed by Dr Paul Doran, Head of Derivatives, and Eric Holt, Head of Credit, the fund leverages the wider bond expertise of RLAM’s award winning fixed income team, to distil their “best ideas” into an aggressively managed bond fund.

The fund seeks to achieve a total return through income and capital enhancement opportunities over the medium to long term. Holding between 40-60 stocks, the fund is more concentrated than RLAM’s traditional bond funds. Around 90% of the fund is invested in conventional fixed income stocks, with up to 10% allocated to high yielding, "bond like" equities. Credit and equity derivatives are also used to manage the fund's overall duration, mitigate risk exposure and enhance returns.

Head of Sales, Stan Bland commented: “Paul and Eric have done a great job managing the Fund over the past year, combining their strong stock selection skills and controlled use of derivative instruments to deliver excellent returns. This is a fund that appeals to both Wholesale and Institutional investors as a high performing part of a wider bond allocation”.

Dr Paul Doran added: “Eric and I have been very pleased with the Fund’s strong performance over the past 12 months as we see this as a true test of our best ideas in bonds. Looking ahead, we will continue to concentrate on what we are good at – buying bonds that we think will give strong risk adjusted returns and making full use of UCITS III rules to add value and mitigate risks through derivative instruments.”