Fund overview
The Royal London UK Corporate Bond Pooled Pension Fund is an actively managed portfolio which gives pension funds access to a broad universe of Sterling denominated fixed interest investments. The fund represents an effective way of accessing the full skills and experience of RLAM’s fixed interest team in a single investment vehicle. The fund is benchmarked against the iBoxx Sterling Non-Gilt All Maturities Index and aims to outperform this index by 0.80% per annum, gross of fees, over rolling 3-year periods within an acceptable risk framework. The fund will invest mainly in Sterling credit bonds although the manager can hold other securities including government bonds, index linked securities, non-Sterling credit bonds and floating rate notes when thought appropriate.
Manager
Sajiv Vaid is the lead manager for the fund and is supported by a skilled and experienced team.
Sajiv was appointed in 2000 and is responsible for managing corporate bond portfolios for institutional and retail clients. He has a wealth of experience working in global credit markets; prior to joining RLAM, Sajiv worked for Fuji Bank. He graduated from the University of Hull in 1991 in Economic & Social History and holds an MA in Modern International Studies from the University of Leeds.
Investment approach
Central to the investment process is our belief that fixed interest markets offer inefficiencies that can be exploited by our experienced team. 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 our quarterly economic review in which we assess key economic factors such as growth, inflation and interest rates. 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 we do not rely just on credit ratings; a key question for us is: “are we getting sufficient reward for the risk we are taking?”. In practice this means that we hold credit bonds that are excluded from the credit benchmark (e.g. unrated bonds, smaller issue size bonds, sub-investment grade bonds and non-sterling bonds) where we believe that valuations are attractive. Our approach allows us to focus on investing for the longer-term.
The fund will differ from benchmark weightings when we have strong investment views. Asset allocation, interest rate views and stock / sector selection will be the key risks within the fund. We firmly believe in credit diversification as a way of reducing single name credit risk.