Enhanced Cash Plus Fund


Fund overview

The Fund aims to preserve capital and produce income by investing predominantly in cash as well as investment grade debt securities issued by governments, government agencies and supra-nationals. The Fund is managed in line with RLAM’s existing cash philosophy of creating straightforward, transparent and highly liquid portfolios with the aim of delivering positive returns in a range of market conditions without taking undue risk. It is well-diversified across a range of securities including cash, deposits, floating rate notes, money market instruments, short dated debt securities and other debt securities. The Fund's predefined ethical criteria mean that it will not invest in companies or issuers that generate more than 10 percent of their revenues from armaments and tobacco.

Fund managers

This fund is jointly managed by Craig Inches and Richard Nelson. 

Craig joined RLAM in January 2009 as a fund manager with the fixed interest team. He is responsible for the management of government bond portfolios including index-linked bonds, gilts and non UK sovereign debt. Craig joined RLAM after an 11 year career at Scottish Widows Investment Partnership (SWIP) where he was Fixed Income Investment Director. At SWIP, Craig built up a strong track record across a wide range of fixed income funds. Craig has an MSc in Investment Analysis from Stirling University and a BSc (Hons) in Actuarial Mathematics and Statistics from Heriot-Watt University.

Richard Nelson joined RLAM from The Co-Operative Group when its life, pensions and asset management business was acquired by Royal London in 2013. Richard joined The Co-operative as a trainee actuary in 1994, before moving into Asset Management in 1997 where he helped run the cash and treasury function from 1999.  He has been managing gilts since 2000 and corporate bonds since 2005.  Richard qualified as an actuary in 2003 and holds a degree in Mathematics & Statistics from Exeter University. 

Investment approach

The Fund has a similar investment philosophy to, and maintains many of the core characteristics of, the existing RL Cash Plus Fund but with the additional flexibility to invest in short-dated credit, including asset backed securities (covered bonds and RMBS). The Fund targets investors who are seeking a greater return than that offered by Cash Plus with a corresponding increase in risk.

The managers believe the key to achieving consistent long-term performance is through controlled portfolio construction. They seek to add excess return from adopting measured positions at an outright duration level, along the yield curve and at a stock level. The Fund draws on the expertise of our government bond and cash management teams.

Cash

The portfolio only invests in straightforward, highly liquid instruments issued by a wide range of highly rated banks. This diversification spreads the credit risk and provides greater security for investors in the Fund. All banks have the highest short-term rating from the major ratings agencies and any changes to those ratings would lead us to review the portfolio to ensure it maintained the highest credit quality.

Government bonds

The management of UK government bonds follows a top down process, but the managers believe significant value can be added through stock selection. The investment approach for UK government bonds has two elements:

  • assess the market drivers and their behaviour in a way that allows them to define the potential sources of incremental return
  • and make sure that portfolio construction and risk allocation remain consistent with the portfolio objectives.

Product Risk Warning

Past performance is not a guide to future performance. The value of investments and the income from them is not guaranteed and may go down as well as up and investors may not get back the amount originally invested. Unlike the income from a single fixed income security, the level of income (yield) from a fund is not fixed and may go up and down. For funds that use derivatives, their use may be beneficial, however, they also involve specific risks. Derivatives may alter the economic exposure of a fund over time, causing it to deviate from the performance of the broader market. This fund can invest more than 35% of its value in government securities.

Investing in an inflationary environment