In today's volatile markets, many of your clients may still be hesitant to invest in equities. In fa...
In today's volatile markets, many of your clients may still be hesitant to invest in equities. In fact, if your
clients fall into any of the following categories then read on:
- Looking to maximise income
- Seeking to diversify an existing equity portfolio
- For client's who are hesitant to invest in equities at this time
Investing in UK government bonds can provide both your risk averse clients and those looking to receive an income with an
alternative to equity and higher risk corporate bond funds. In fact in the current market environment, UK government bonds have
provided a safe haven for investors whilst providing the opportunity to achieve capital growth.
In an interview with Mark Parry, Manager of the AA-rated Dresdner RCM Gilt Yield Fund, we ask him
for his views on the UK Government bond market. Mark has twelve years investment expertise and
also manages the Dresdner RCM Managed Preference and Bond Fund for which he is ranked in the
top 10 UK other bond fund managers.
Why invest in UK gilts at this time?
Gilts benefit from the government providing a real guarantee of both principal and income and are not subject
to the default risks associated with corporate bonds. Gilts are also less volatile than more esoteric bonds such as
some of the much-publicised "zeros".
The Oxford English Dictionary defines "gilt-edged" as "securities of exceptionally high value... also used to denote something of
very high quality, richness, elegance, etc.". In this uncertain world, what price security? Was "elegance" and "very high quality"
ever more appealing?
What are your views on the economy for the coming months?
We believe that the Bank of England will raise base rates from the current, 38-year low of 4%, but only gradually and not back
to historically high levels. Against a backdrop of moderate but positive growth and with inflation staying below the Monetary
Policy Committee's target of 2½% we believe gilts will continue to offer a steady and secure income with the opportunity for
capital gains in the future.
How is this reflected in the positioning of the portfolio?
The portfolio is currently close to a neutral risk position, in marked contrast to the overweight exposure taken throughout much
of 2000 and 2001 as base rates were falling.
Notwithstanding our constructive view of bond markets we believe that the
current volatility in asset markets suggests taking only moderate risk exposures.
Key Advantages of the Dresdner RCM Gilt Yield Fund
The only AA-rated pure gilt fund
The Dresdner RCM Gilt Yield Fund aims to provide a high
level of income and capital appreciation by investing in
British Government securities. It is the only pure gilt fund to
have an AA Standard & Poor's Fund Management Rating.
"The Dresdner RCM Gilt Yield Fund is a high quality
investment vehicle, which is managed in a top-down
manner and invests solely in UK government bonds."
Standard & Poor's, July 20012.
Standard & Poor's Fund Rating..............AA
Morningstar Rating .....................* * *
Standard & Poor's Star Rating.........* * * *
If you have any further questions about the Gilt Yield Fund please contact our Investor Services team.
Monthly economic updates are available on our web site at www.dresdnerrcm.co.uk, just look under 'investment funds' then
'range of investment funds' for the Market Review on the right hand side. Alternatively please call us if you would like to receive
our fund factsheet booklet and economic overview each month.
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