Rathbones doubles up on bond fund launch due to Brexit

£150m Noelle Cazalis fund extended to intermediaries

Rathbones has confirmed it will launch a Sicav version of its High Quality Bond fund in an announcement confirming the existing Oeic fund is now available to intermediaries.

The investment grade bond fund launched in November 2018 and is the first lead managed by Noelle Cazalis (pictured), who is co-manager on the Ethical Bond fund, alongside head of fixed income Bryn Jones.

The £152m fund has been available to “cornerstone investors” but is now available for retail investors via platforms and advisers, a press release said. Unlike her other fund, the High Quality Bond fund does not have an ethical screen.

Rathbones chief executive Mike Webb said the fund is meant to be in the part of portfolios that helps investors “sleep easier”.

“Increasingly, clients are telling us that they are uncomfortable holding significant assets in cash and are concerned over their fixed income exposure, particularly at the lower-quality end.”

Brexit prompts fund double ups

Rathbones is also planning a Sicav version of the fund, according to the press release.

It will become the sixth fund in Rathbones’ Sicav range, which was initially launched as a group of feeder funds to UK-domiciled funds. However, due to the UK pursuing a hard Brexit, Rathbones confirmed in February that the funds would become directly invested on the assumption the UK loses its Ucits status and Oeics become alternative investment funds (AIFs).

The Ethical Bond fund that Cazalis also manages, is available as a Sicav fund, alongside the Rathbone Income, Multi-Asset Enhanced Growth, Multi-Asset Strategic Growth and Multi-Asset Total Return funds. Rathbones has 22 funds in its unit trust and Oeics range, according to FE Analytics.

In January, rival asset manager Crux also revealed it was stepping up its Brexit planning and switching Sicav feeders into directly invested funds. Fundsmith has also shifted £2.3bn of assets into Sicavs.

Financials dominate portfolio

The fund seeks to invest at least 80% in bonds rated A- or above.

Currently it has 8.8% with a rating of BBB+ or below or no rating, according to its July factsheet. Banks currently account for 45.05% of the portfolio, followed by 10.59% in savings and loans, and 9.65% in insurance. Sovereigns account for 6.43%.

Willis Owen head of personal investing Adrian Lowcock said the fund process and objectives look similar to the Ethical Bond fund although without a screen that removes around a third of the universe.

Income is paid quarterly with yield to maturity currently 1.27% and an income yield of 2.8%. Modified duration is 2.07 years.

Like the Ethical Bond fund, the High Quality Bond fund sits in the Investment Association £ Corporate Bond sector.

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