Over 5 Year Corporate Bond Fund

Fund overview

The Fund aims to achieve a combination of income with some capital growth. The Fund will invest mainly in sterling credit bonds and UK government securities although the manager can hold other securities including overseas government bonds, index linked securities, non-sterling credit bonds and floating rate notes when thought appropriate. The Fund makes use of interest rate swaps to extend duration, and other derivative strategies to manage the portfolio more effectively. In this way, clients are able to better match the interest rate sensitivity of the portfolio to that of their scheme without foregoing investment opportunities in wider fixed interest markets.


Paola Binns is a Senior Fund Manager on the Fixed Interest Team and is responsible for the management of corporate bond portfolios. She brings over 30 years' experience in bond markets to RLAM, having joined in August 2007 from Credit Suisse Asset Management where she was responsible for managing sterling credit assets. Paola has developed a strong track record across a wide range of bond asset classes having held a number of roles specialising in European corporate bonds, government bonds and Emerging Market debt. Paola has an MA degree in History and Spanish Literature from Oxford University.

Investment approach

Central to the investment process used across our Fixed Interest Team is the belief that fixed interest markets offer inefficiencies that can be exploited. The Fund aims to achieve outperformance from multiple sources (e.g. asset allocation, stock selection, duration and yield curve management as well as off-benchmark investing).

Asset allocation and duration / yield curve positions are derived from the team's quarterly economic review in which key economic factors such as growth, inflation and interest rates are assessed. Stock selection reflects the views of RLAM’s experienced credit team; the process is underpinned by a core investment philosophy of favouring 'covenants, structure and security'. This means that the team do not rely just on credit ratings; a key question for them is: “are we getting sufficient reward for the risk we are taking?”. In practice this means that credit bonds that are excluded from the credit benchmarks (e.g. unrated bonds, smaller issue size bonds, sub-investment grade bonds and non-sterling bonds) are held where valuations are believed to be attractive. This approach allows the team to focus on investing for the longer term.

The Fund will differ from benchmark weightings when the team have strong investment views. Asset allocation, interest rate views and stock / sector selection will be the key risks within the Fund. Credit diversification is deemed an important means of reducing single name credit risk.

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.