Sector classifications and investment approach


Jonathan Platt, Head of Fixed Income

 2 August 2016

With effect from Monday 25 July 2016, RLAM moved two funds – RL Ethical Bond Fund and RL Short Duration Credit Fund – from the Investment Association (IA) Sterling Corporate Bond Sector to the IA Sterling Strategic Bond Sector. The change to the IA Sector classification is not driven by changes to the objective or strategy of either Fund, and both will continue to be managed as they have been to date by Fund Managers Eric Holt and Paola Binns, respectively. RLAM have a specialist approach to the management of credit bonds, which highlights the virtues of investing in bonds that are secured against an underlying asset. A significant portion of these bonds are not rated by the ratings agencies, and therefore do not count towards the minimum 80% investment grade limit required for the IA Sterling Corporate Bond sector. However, RLAM believe that most of the unrated bonds in which we invest have investment grade characteristics.
Both the RL Ethical Bond and RL Short Duration Credit Funds will continue to emphasise secured debt, where appropriate, as we firmly believe it is important to select the right bonds for our clients’ portfolios, irrespective of sector classifications. Performance of the Funds will continue to be monitored against a suitable investment grade credit index, but we do not want to be forced to compromise on stock selection – diluting what we believe to be our competitive advantage – just to gain entry to a particular market sector. While the IA Sterling Strategic Bond sector has a requirement for a minimum of 80% of the portfolio to be invested in sterling denominated assets, there is no investment grade restriction, allowing us the freedom to manage the portfolios with the aim of delivering the best outcomes for our clients.
If you have any further questions, please speak your RLAM contact.
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.

With effect from Monday 25 July 2016, RLAM moved two Funds – RL Ethical Bond Fund and RL Short Duration Credit Fund – from the Investment Association (IA) Sterling Corporate Bond Sector to the IA Sterling Strategic Bond Sector. The change to the IA Sector classification is not driven by changes to the objective or strategy of either Fund, and both will continue to be managed as they have been to date by Fund Managers Eric Holt and Paola Binns, respectively. RLAM have a specialist approach to the management of credit bonds, which highlights the virtues of investing in bonds that are secured against an underlying asset. A significant portion of these bonds are not rated by the ratings agencies, and therefore do not count towards the minimum 80% investment grade limit required for the IA Sterling Corporate Bond sector. However, RLAM believe that most of the unrated bonds in which we invest have investment grade characteristics.

Both the RL Ethical Bond and RL Short Duration Credit Funds will continue to emphasise secured debt, where appropriate, as we firmly believe it is important to select the right bonds for our clients’ portfolios, irrespective of sector classifications. Performance of the Funds will continue to be monitored against a suitable investment grade credit index, but we do not want to be forced to compromise on stock selection – diluting what we believe to be our competitive advantage – just to gain entry to a particular market sector. While the IA Sterling Strategic Bond sector has a requirement for a minimum of 80% of the portfolio to be invested in sterling denominated assets, there is no investment grade restriction, allowing us the freedom to manage the portfolios with the aim of delivering the best outcomes for our clients.

If you have any further questions, please speak your RLAM contact.

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.