With Coombs and Jones, who is also manager of the Rathbone Ethical Bond Fund, will be investment manager Will McIntosh-Whyte, supported by credit analyst Noelle Cazalis.
The fund will be launched on 3 October and will invest in both individual fixed income securities and collectives. It will be run on a total return basis with a gross estimated initial yield of 3.84% and measured against the yield on the FTSE Actuaries Government Securities UK Gilts under five-year year Index.
Half of the portfolio will typically be invested in sterling-denominated government bonds and investment grade corporate debt with the remainder in collective investments focused on specialist areas such as high yield and emerging market debt, distressed debt and credit alternatives on a best-of-breed basis.
As much as 20% of the total portfolio can be invested in off-benchmark assets such as qualifying alternative fixed income funds and qualifying structured products. The initial asset allocation will be UK investment grade credit (25%); index-linked (12.5%); gilts (12.5%); emerging market debt (15%); high yield (15%); overseas investment grade credit (10%), and overseas government securities (10%).
Commenting on the launch, Jones explained he will achieve the target yield, saying: “We will identify funds for inclusion that have consistently outperformed or met their benchmarks, with the lowest levels of correlation and risk. Individual bond selection will be made using the same analysis techniques used for the Rathbone Ethical Bond Fund excluding, of course, the ethical screening process.”
He added that investors should expect some short-term volatility and as a result should be able to commit money to these investments for five years or more if necessary, especially if there has been an extreme market event.
