Post Brexit Fund Positioning


Shalin Shah, Manager of RL Duration Hedge Credit Fund

24 June 2016

On account of the fact that the RL Duration-Hedged Credit Fund has very low underlying interest-rate sensitivity, the price impact of the volatility in markets this morning has been greater as spreads moved wider. Subordinated financials have witnessed the greatest movements, with many bonds trading 30-70bps wider; generic corporate and asset backed bonds have, however, fared better, with a general widening of 10-15bps.

We have undertaken limited trading today, and we are not altering our core positioning. The portfolio’s bias towards more defensive secured and asset-backed bonds provides a level of protection which will continue be important, as we anticipate that heightened volatility and risk will continue as political and economic uncertainties persist.

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. The views expressed are the author’s own and do not constitute investment advice. 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.