Scottish Widows Investment Partnership (Swip) has launched a third fund into its high alpha bond range as the first two reach their 12-month anniversary.
Swip Sterling Bond Plus will combine the approaches used on Neil Murray's Corporate Bond Plus and Graeme Caughey's Gilt Plus funds, split 46% gilts and 54% non-gilts at outset.
The fund will come under the overall control of Caughey, with Murray assisting on the corporate bond decisions. Although it will vary in terms of how much it holds between the two funds, the portions will mirror the two portfolios directly.
It will aim for a return 150 basis points ahead of its benchmark, the iBoxx Sterling All-Maturities Index, before charges.
Sterling Bond Plus is structured in a way that aims to outperform its component fund. The corporate bond and gilt vehicles both aiming to deliver 100 basis points a year above their respective benchmarks.
Caughey said the aim is to generate this additional performance via asset allocation. "We are able to change the weightings between the component parts extensively, with either able to drop to 25% of the total," he said.
The initial asset allocation he has chosen for Sterling Bond Plus reflects not so much a preference for gilts as a negative view on corporate bonds. "We are about 15% underweight in AAA bonds as they are fully valued, particularly at the long end," he added.
Industry Voice: Scottish Widows pension expert Robert Cochran and economist Andrew Scott discuss the future of employment and income, in episode three of Scottish Widows' podcast series.
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