Royal & SunAlliance Investments and Standard Life Investments are cutting the headline yield on thei...
Royal & SunAlliance Investments and Standard Life Investments are cutting the headline yield on their high yield corporate bond funds in the wake of the new Autif rules on bond yield calculations, writes Leo Bland.
As reported in Investment Week, from the beginning of this month fund management groups must give equal prominence to gross redemption yields as well as running income yields within all of their marketing literature.
Both the income yield and redemption yield will have to reflect the impact of all charges in the new industry-wide standard calculation.
Autif, along with the support of the FSA, has created the standard so consumers can better understand the nature of the product relative to others in the market.
The headline yield on the Royal & SunAlliance Extra Income Bond fund is falling to 8.3% from 8.6% to reflect the changes while the headline yield on Standard Life's Higher Income fund falls to 8.5% from 8.75%.
Threadneedle said it tends to use a headline yield around 75 basis points less than the full yield that could be quoted on its High Yield Bond fund in a bid to avoid disappointing investors.
It quotes a headline yield of 8.75% while the gross redemption yield and running yield are around 9.5%.
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