Corporate Bond Monthly Income Trust


Fund overview

 

The Fund aims to produce an attractive and consistent monthly income with long-term capital stability. The Fund aims to take advantage of value in the corporate bond market, using a combination of an active interest rate strategy and conservative credit management. The Fund invests primarily in sterling denominated, investment grade, fixed interest securities but also has the ability to invest in non-sterling denominated bonds as appropriate. At least 40% of the trust's assets must be invested in bonds rated Single-A or above.

Fund manager

 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 manager's overall investment philosophy is to allocate capital between a broad range of investment grade corporate bonds and gilts to provide an attractive and stable income whilst, at the same time, seeking to preserve capital over the medium term. The Fund does not buy yield mechanically but analyses the longer-term cashflow dynamics of the relevant bonds to determine the sustainability of interest payments over time.

The manager's investment style is best described as follows:

  • Long term - Typical investment horizon of three to four years
  • Top-down - Asset allocation, duration, yield curve and sector
  • Stock selection - Driven by strong fundamental analysis
  • Responsible - Embedded environmental, social and governance (ESG) analysis provides a broader perspective


The team adopts a top-down approach to asset allocation, duration, yield curve and sector positioning whilst utilising a team of in-house investment analysts to adopt a bottom-up approach to industry and issuer selection within the preferred sectors.
In attempting to consistently produce an attractive income whilst protecting capital values over time, the Fund will seek to exploit valuation anomalies in both the interest rate and credit markets.

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.