Govett Investments has brought out a monthly income bond fund looking to provide a gross yield of 7....
Govett Investments has brought out a monthly income bond fund looking to provide a gross yield of 7.40% from a portfolio without AAA or AA rated paper, writes Adam Lewis.
The Govett Corporate Monthly Income Oeic, domiciled in Dublin, is to be run by Richard Wisentaner who already manages the £5.6m Govett Corporate Bond fund. The initial will be 3.5% with an annual management fee of 1.25%.
Compared to the Merrill Lynch Sterling Corporate Index the fund will be much more heavily weighted towards the BBB area with 47.67% compared to the benchmark 11.73%.
The fund will be underweight in A bonds with 30.64% of the portfolio compared the benchmark 41.32%. The portfolio contains no AA or AAA bonds.
The fund expects to have 50-60 holdings by the time the portfolio settles down after launch.
Possible bond holdings in the portfolio are Pearson, the multimedia BBB+ bond, yielding 7.0%, which matures on 27 October 2014 and the food wholesaler Premier International Food, a B3 bond currently yielding 12.25% which matures on 1 September 2009.
The fund will buy not only UK corporate bonds but euro-denominated ones as well. Charles Lillis, managing director at Govett, said the portfolio was higher risk than gilts but argued this part of the corporate market had provided good returns.Investment Week 9 July 2001
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