UK lower risk funds
On the whole these funds have done what they should have done - down a touch in the last 6 months, but doing somewhat better than the stock market-linked funds. The bond funds are largely split between mainstream investment-grade bonds, strategic bond funds, that have the freedom to invest across the bond fund range, and higher income bond funds, which have the greatest emphasis on non-investment grade bonds. The one mainstream bond fund, New Star Sterling Bond, is down 4% since the beginning of 2008, but the value in the fund, and in the corporate bond sector as a whole, is outstanding, and many managers tell us the current opportunities are unprecedented. With mouth watering yields, plus scope for capital growth on top as the current problems heal over time, this fund should definitely continue to be held.
It is the same for the two strategic bond funds from Artemis and Henderson (-1% and unchanged respectively). To date the problems in the corporate bond market have largely been of a technical nature, rather than because of any huge fundamental change in the outlook. From last Summer there was forced selling of highly liquid investment grade bonds by institutions most affected by the credit crisis. The price falls also fed down into the non-investment grade arena, again creating opportunities which will be exploited in the New Star Fixed Interest (-3%), the one non-investment grade fund. Invesco Perpetual Monthly Income Plus (-1%) additionally has some equity exposure. Sit tight on all of these.
Last time we added the JPM Cautious Total Return (+0.4%), which had held its own during prior turbulent times, and is down marginally this year. We are looking to add to such absolute return funds once one or two more track records come through. The New Star UK Property fund is also down a bit this year (-2%) - a fall of any consequence is always disapppointing, but property is now doing what it was always meant to do, being boring while more volatile assets fall sharply (the UK stock market is down 5% over the same period). The same cannot be said of the Standard Life Select Property fund, in performance terms the outstanding disappointment in this selection, down 7%. The bricks and mortar element of the fund offered a bit of stability, but not enough as the greater part in property shares fell sharply. Even so, to sell now would be to lock in a loss; many property shares are priced for something akin to Armageddon, and providing that you are a longer term investor you should ride out current turbulence.
|
Co and Fund
|
Rating
|
Risk
|
|
|
|
New Star Sterling Bond
|
None
|
2.1
|
About
|
Buy
|
|
Artemis Strategic Bond
|
N/A
|
N/A
|
About
|
Buy
|
|
Henderson Strategic Bond
|
Bronze
|
2.8
|
About
|
Buy
|
|
JPM Cautious Total Return
|
N/A
|
N/A
|
About
|
Buy
|
|
New Star Fixed Interest
|
Bronze
|
2.2
|
About
|
Buy
|
|
Invesco Perpetual Mthly Income Plus
|
Silver
|
2.6
|
About
|
Buy
|
|
New Star UK Property
|
N/A
|
3.7
|
About
|
Buy
|
|
Standard Life Select Property
|
N/A
|
N/A
|
About
|
Buy
|
The rating and risk can only be shown for funds with at least three year track records.
Back to Top