UK Low Risk

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Lower risk

Although we have felt increasingly nervous over the 6 months to June 2010, of the nine funds six are higher, and were a better option than cash.

Starting at the bottom, Black Rock UK Absolute Alpha (down 0.21%) was under scrutiny last time, but we hung on. In the range of market conditions since Autumn 2008 it is now reasonably clear that the fund has lost its way, and it is now out (hence not now shown in the table).

Schroder Monthly High Income (up 1.31%) has struggled versus its peers over the last 6 months to June 2010, reversing the prior 6 months when it was up in excess of 20%. In more positive market conditions this fund can undoubtedly perform - the only debate is whether we are in the right market conditions. We are adding another safety-first fund, Fidelity Moneybuilder Income.

Henderson Strategic Bond and Artemis Strategic Bond were up 3.1% and 4.1% respectively. But this does mask a falling away from early May, as both funds were caught out by bank bonds and high yielders falling sharply. We would be wary of these two and the Schroders fund in current market conditions, but they remain on the shopping list for better times.

You will recall that the Henderson Sterling Bond fund was included to exploit the potential which still existed in the bank bonds, where it had a heavy weighting, and we suggested low double digit gains for the year. In fact it hit that target in the first four months of this year, and also managed to avoid much of the turmoil in May, the manager having switched out of many bank bonds just in time. It remains a top performer, hang on.

M&G Corporate Bond and Standard Life Corporate Bond were included to provide a more stable base, being more conservatively managed. This they have achieved. Although more risky than the latter, the F&C Extra Income Bond fund also continued to deliver.

Standard Life Select Property is the sole property feature, a blend of global property securities and bricks and mortar. A decent 6 months (Jan-June 2010), but right now does not feel like a time to take on property risk.

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