Royal London Asset Management is launching a high yield bond fund in March, with a target yield of 8...
Royal London Asset Management is launching a high yield bond fund in March, with a target yield of 8.5%.
The Royal London High Yield Bond fund will be managed by Jonathan Platt, the group's head of fixed interest.
The fund will be at least 80% invested in sterling sub-investment grade bonds in order to be classified in the Autif UK other bond sector, but will have scope to look outside that universe.
Platt said: 'It will primarily be invested in sterling bonds, with a mixture of sub-investment grade bonds, bonds at the lower end of the ratings spectrum, unrated bonds that the market is mispricing and euro exposure.'
He added that he expects the fund to have around 60 holdings at launch, as he is keen to run a highly diversified portfolio. The number of holdings will be increased to 100 when the fund reaches £50m.
Platt added: 'The problem we have in the UK market is that there is too much concentration of high yield in certain sectors. We will be trying to look at the wider market and not be too index based.'
The high yield bond fund will sit alongside the group's existing gilt and corporate bond offerings.
The initial charge is expected to be 6%, with a 1.13% annual management charge. Commission is payable at 3%, with 1.5% trail.
Improving portfolio diversification
Hanging on the telephone
German recession concerns