Fund overview
The Royal London UK Long Corporate Bond Pooled Pension Fund is an actively managed portfolio which gives pension funds access to a broad universe of long dated Sterling denominated fixed interest investments. The fund is benchmarked against the iBoxx Non-Gilt Over 15 Year Index and aims to outperform this index by 0.80% per annum, gross of fees, over rolling 3-year periods within a risk controlled 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
Paola Binns is the lead fund manager, and she is supported by a skilled and experienced team. She brings some 20 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 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, 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, short / medium dated 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.