The £50m fund has been named the Short Duration Credit fund to reflect the change to its investment strategy which will see the duration, and hence interest rate sensitivity, inherent in the corporate bonds it holds reduced through the use of derivatives.
The fund’s benchmark has also changed, from the IMA Sterling Corporate Bond sector average to a custom-hedged corporate bond index, but SLI stressed it continues to have access to a wide universe of corporate bonds. This includes the option of investing a proportion of the portfolio in high yield bonds, which should provide a higher yield and naturally shorter duration.
Daniel McKernan, who joined SLI as head of sterling investment grade credit in September 2013, took over management of the fund from David Ennett and David Sol in December.
“SLI regularly reviews its product offerings and is wholly committed to providing investment solutions that meet investors’ needs,” he said.
“We continue to see value in credit spreads, but recognise that some investors are increasingly concerned about the negative impact that rising rates could have on the performance of corporate bonds.
“The Short Duration Credit fund enhances the choice of fixed income funds we have available to retail investors and provides investors access to our credit selection expertise, but with materially less exposure to changes in interest rates.”
SLI currently manages £65.5 billion in fixed income funds.
