Old Mutual Global Strategy Bond fund
Sheridan Admans, investment adviser at The Share Centre, explains why investing in a diversified portfolio of fixed and variable rate bond investments can gain an attractive level of income plus capital appreciation.
The Old Mutual Global Strategy Bond fund is a great example of this type of investment.
"The fund is managed with four performance objectives in mind: to beat cash, grow the net asset value (assets less liabilities) on a consistent basis, to rank top quartile and outperform the benchmark over a market cycle.
"Fund manager, Stuart Cowley tries to position the fund to capture the major secular trends in markets, while also managing short term volatility. He is benchmark-aware rather than benchmark-driven and has a great deal of freedom in positioning the fund, with no formal limits on the sources of returns.
"Cowley, who heads a fixed income team of seven, seeks to achieve an attractive total return (combination of growth and income) through an unconstrained, 'go-anywhere' global bond and currency portfolio. He does this with a view to protecting the value of clients' money, although no guarantees can be made.
"The fund is typically at least 80% invested in fixed interest securities and no more than 80% of the fund is invested in sterling denominated securities. Investors should be aware that the manager can also use exchange traded derivatives (i.e. futures and options) to manage exposures.
"These types of funds invest in companies that issue debt to raise capital. The overall risk of these funds needs to be considered in conjunction with their underlying assets. Those funds that primarily invest in 'Investment Grade' debt will tend to be less volatile and at risk to company defaults compared to those that focus on 'Non-Investment Grade' debt.
"The fund is suitable for those investors with a low risk appetite for seeking income and who are comfortable with income derived from overseas assets.
"Old Mutual Global Strategy Bond fund has an annual charge of 1% and an initial charge of 3.5%. The minimum initial investment is £1000, with top ups of £500.
"As the fund features in The Share Centre's Platinum 120 range, customers wishing to invest in the Old Mutual Global Strategic Bond fund will not have to pay the initial charge or purchase dealing commission. Customers can also invest in the fund from as little as £10.