Rathbones to launch Strategic Bond fund

Rathbones Unit Trust Management has unveiled a Strategic Bond fund to be managed by Bryn Jones.

Launched on 3 October, around 50% of the fund will be invested in sterling-denominated government bonds and investment grade corporate debt. The remainder will focus on collective investment vehicles, such as high yield and emerging market debt, distressed debt and credit alternatives on a best-of-breed basis.

Jones will be supported by David Coombs, head of multi-asset management, who will be in charge of the collective investment vehicle investments, while Jones will focus on his main areas of expertise - gilts and corporate bonds.

"Whilst a number of other strategic bond funds have come to the market in recent years, we are differentiated by our ability to invest directly in fixed income securities and in collective vehicles, harnessing the considerable experience across Rathbones," said Jones.

To reduce risk and volatility within the fund, up to 20% of the total portfolio can be invested in off-benchmark assets such as qualifying alternative fixed income funds and qualifying structured products.

The base level asset allocation will be UK investment grade credit (25%); index-linked (12.5%); gilts (12.5%); emerging market debt (15%); high yield (15%); overseas investment grade credit (10%), and overseas government securities (10%). The managers will be able to alter these allocations by up to 10%, but more dramatic changes will have to be signed off by the chief investment officer and the risk committee.

The fund will target long-term total returns, with the gross estimated initial yield on the fund being 3.84%.

Jones already manages the Rathbones Ethical Bond fund, which has returned 21.9% over three years against a 19.3% sector average, according to Morningstar.