Market Leaders in Fixed Interest Investment
Good thinking. Well applied.
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An approach that gives us an edge
Royal London Asset Management (RLAM) has a highly experienced fixed interest team that has developed a reputation as one of the UK’s leading managers of government and credit bonds and has delivered strong performance through changing economic conditions and business cycles. Our success is based on a deep understanding of our clients’ investment objectives and the use of our in-depth market knowledge to exploit investment opportunities that help us meet these aims. The experience and skill of our fund management team sets us apart and gives us an edge in a highly competitive market. We add value by using our experience and exploring parts of the market that others overlook. Our product range includes a wide variety of strategies covering government debt, investment grade and high yield. These strategies can be accessed through both our pooled fund range and as segregated portfolios. We are also able to offer bespoke solutions covering buy & maintain credit and LDI. Delivering outstanding and consistent performance The combination of a high quality team and a robust, repeatable process have enabled us to deliver consistent and outstanding performance in both pooled and segregated fixed interest portfolios during a wide variety of economic and market conditions. Across the fixed interest spectrum, many of our funds and mandates have outperformed their benchmarks over shorter and longer term time horizons. Our many industry awards are further testament to the strength of our proposition. We add value through actively managing asset allocation as well as through stock selection within government and credit bonds. Established philosophies for government bonds and credit Although we believe that government bond markets are relatively efficient, as active fund managers we are nonetheless able to take advantage of valuation anomalies as they occur, particularly in light of the unprecedented conditions that 2
have resulted from Quantitative Easing. We look widely for government bond opportunities and within sterling portfolios we
make active use of global bonds (with currency hedging). We
With the recent addition to the team of specialist global high
target multiple sources of outperformance, such as yield curve
yield expertise, we have been able to broaden our range of
positioning, duration management and stock selection, and our
credit strategies. We now offer sterling investment grade, sterling
robust process has enabled us to add value in a wide variety of
ethical bond, Sterling duration hedged, European investment
economic and market situations. Our product range includes
grade, investment grade buy & maintain, bespoke cashflow
funds investing in conventional and index-linked UK and overseas
matching, sterling higher yield and global high yield.
government bonds, as well as bespoke LDI solutions. A highly experienced team and a strong commitment to In contrast to government bonds, there are greater inefficiencies
service
within the credit market and by considering a wider investment
Our team contains experts in government bonds, investment
universe than many of our peers we can uncover value in many
grade credit and high yield and their collective quality is a key
areas that are often overlooked, including unrated and asset
factor in our success. Each team member averages more than
backed bonds and loans. We avoid over-reliance on credit ratings
14 years’ market experience, giving them the confidence to have
as the main determinant of relative value, instead adopting a
the courage of their convictions and to maintain non-consensus
more forward looking approach to credit analysis. Our analysts
positions where they have strong opinions. We have a deep-
use their extensive corporate knowledge to produce medium
rooted tradition of independent thinking, using our own analysis
term forecasts of how they expect the credit fundamentals of an
to uncover the best investment opportunities. We invest for
issuer to change.
the medium term and believe that our investment horizons are longer than most of our competitors. Collectively, this means
We also examine the potential impact of a deterioration in the
that our focus is on value, rather than market momentum
fundamentals of an issuer and the likely recovery rate in the event
or benchmark weightings. We have a strong commitment
of a default. Our internal rating methodology is designed not just
to meeting our clients’ performance and service objectives.
to determine the probability of default, but also to identify the
Managing assets on behalf of a wide range of clients, we pride
protection offered to our clients through covenants and security.
ourselves on our personalised service, customised to meet each client’s individual needs.
Within both investment grade and high yield credit we are value investors, which in practice means that we place strong
A wide range of funds and investment solutions
emphasis on our own research, preferring companies with sound
We pride ourselves on the depth and quality of the fund range
long term business models and bonds that offer strong covenant
we have developed for our clients. We offer fixed interest
protection and asset backing. We believe that credit ratings
solutions to suit all market conditions either through a
are a lagging indicator. Bond investment is about assessing the
combination of specialist funds or through one of our diversified,
probability of default and the recovery rate and we believe that
aggregate bond funds. Different clients have different investment
inefficiencies arise because too little emphasis is placed on the
needs and we have developed funds to meet a range of risk/
latter. We create highly diversified portfolios, in which holding
return profiles. And with different clients subject to different tax
size is a true reflection of risk, that are designed to be robust
requirements and investment restrictions, we offer both pooled
under a wide variety of scenarios. We believe that this process
pension funds and OEICs. We also offer bespoke, segregated
produces higher and more consistent returns and gives us the
solutions to enable larger clients to meet their specific
greatest opportunity to meet our clients’ objectives.
benchmark and performance requirements.
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Our fund range at a glance Our fixed interest funds fall into one of two categories. Our pooled pension funds are sub-funds of the Royal London Pooled Pensions Company. Established under a life company structure, they are suitable for investment by authorised pension schemes. Our OEICs are sub-funds of Royal London Bond Funds ICVC, with the exception of the Sterling Extra Yield Fund and our Global High Yield Funds which are sub-funds of Royal London Asset Management Bond Funds PLC, registered in Ireland and regulated by the Central Bank of Ireland.
Credit funds UK
Pooled pension funds
OEICs
UK Corporate Bond Fund
Corporate Bond Fund
Benchmark: iBoxx Sterling Non-Gilt All Maturities
Benchmark: iBoxx Sterling Non-Gilt All Maturities
Index
Index
Invests in: predominantly sterling bonds, including
Invests in: broad range of sterling fixed interest
unrated and sub-investment grade bonds
assets
UK Long Corporate Bond Fund
Sterling Credit Fund
Benchmark: iBoxx Sterling Non-Gilt Over 15 Years
Benchmark: iBoxx Sterling Non-Gilt All Maturities
Index
Index
Invests in: long dated sterling credit bonds,
Invests in: a broad range of sterling fixed interest
including unrated bonds, and sub-investment bonds
assets
Over 5 Year Corporate Bond Fund
Ethical Bond Fund
Benchmark: iBoxx Sterling Non-Gilt Over 5 Year
Benchmark: iBoxx Sterling Non-Gilt All Maturities
Index
Index
Invests in: predominantly sterling credit with a
Invests in: predominantly investment grade UK
duration of over 5 years
corporate bonds that meet predefined ethical criteria
Sterling Extra Yield Bond Fund Invests in: broad range of fixed interest securities, including investment grade, sub-investment grade and unrated bonds
Duration Hedged Credit Fund Targets: positive return over the medium term Invests in: predominantly investment grade corporate bonds across a range of maturities; uses derivatives to protect against interest rate risk and targets duration of zero years
Europe
European Corporate Bond Fund Benchmark: Merrill Lynch Corporate & Collateralised Index Invests in: predominantly euro-denominated investment grade credit; may invest in subinvestment grade debt and other securities issued by
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European entities
Pooled pension funds
Credit funds Global (cont.)
OEICs Global High Yield Bond Fund Benchmark: BoAML BB-B Global Non-Financial High Yield Constrained Invests in: predominantly sub-investment grade debt issued by companies domiciled in the UK, Europe, Asia and the United States, across the high yield credit spectrum. The fund may also invest a small portion in investment grade securities.
Short Duration Global High Yield Bond Fund Targets: 3 month LIBOR Invests in: predominantly sub-investment grade debt issued by companies domiciled in the UK, Europe, Asia and the United States, across the high yield credit spectrum. The fund may also invest a small portion in investment grade securities.
Aggregate/ mixed asset funds
UK
Pooled pension funds
OEICs
UK Aggregate Bond Fund
Cash Plus Fund
Benchmark: iBoxx Sterling Overall Index
Invests in: cash, deposits, money market
Invests in: UK government and sterling credit bonds,
instruments, covered bonds, sovereigns,
actively allocating between the two asset classes;
supranationals and short-dated UK government
may also invest in index-linked, overseas and sub-
securities
investment grade bonds
UK Long Aggregate Bond Fund Benchmark: iBoxx Sterling Over 15 Years Overall Index Invests in: long-dated UK government and sterling credit bonds, actively allocating between the two asset classes; may also invest in index-linked, overseas and sub-investment grade bonds
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Our fund range at a glance (cont.)
Government UK bond funds
Pooled pension funds
OEICs
UK Gilt Fund
UK Government Bond Fund
Benchmark: FTSE All Stocks Gilt Index
Benchmark: FTSE All Stocks Gilt Index
Invests in: predominantly UK government bonds of
Invests in: predominantly UK government bonds of
all maturities, based on economic, duration and yield
all maturities ranges, based on economic, duration
curve views
and yield curve views
UK Long Gilt Fund
Index-Linked Fund
Benchmark: FTSE Over 15 Years Gilt Index
Benchmark: FTSE A Index-Linked Gilts All Stocks
Invests in: predominantly long-dated UK
Index
government bonds, based on economic, duration
Invests in: broad range of UK government index-
and yield curve views
linked bonds to offer insulation against moves in inflation
Index-Linked Fund Benchmark: FTSE A Index-Linked Over 5 Years Gilt Index Invests in: broad range of UK government indexlinked bonds to protect against moves in inflation
Enhanced Index-Linked Fund Benchmark: FTSE A Index-Linked Over 5 Years Gilt Index Invests in: predominantly in UK government and corporate index-linked bonds, as well as non-sterling government index-linked bonds sterling government index-linked bonds
Global
Global Bond Fund
International Government Bond Fund
Benchmark: JP Morgan Traded World Government
Benchmark: JP Morgan Traded World ex-UK
Bond Index (Hedged)
Government Bond Index (hedged)
Invests in: government and non-government bonds
Invests in: primarily non-Sterling denominated
across the globe
government bonds, with foreign currency exposure hedged back to Sterling
Global Index-Linked Fund Benchmark: Barclays World Government InflationLinked Bond Index
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Invests in: predominantly global index-linked bonds
Fixed interest product range characteristics
Sterling Extra Yield
Ethical Bonds Buy & Maintain
Global High Yield
Return
Global Govt & Index Linked Gilt / Long Gilt
Corporate / Long Corporate Bond
Cash Plus
Aggregate Bonds
UK Index-Linked Bond Short-Dated Bonds
Risk
The above chart is for illustrative purposes only, cannot be relied upon as a guide to actual investment outcomes and should not be relied upon for the purpose of making investment decisions.
Past performance is not a guide to future performance. The value of investments and the income from them is not guaranteed and may go down as well as up and investors may not get back the amount originally invested.
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You should read the Key Investor Information Documents for OEICs or Key Features document for RLPPC funds available on our website prior to investing. For further information about any of our products or services, please contact: Royal London Asset Management 55 Gracechurch Street London EC3V 0UF t: 020 7506 6621 f: 020 7506 6796 e: RLAMSalessupport@rlam.co.uk www.rlam.co.uk
Issued by rlam September 2013. Information correct as at that date unless otherwise stated. rlam is a marketing brand which includes the following companies: Royal London Asset Management Limited, authorised and regulated by the Financial Conduct Authority and which provides investment management services, registered in England and Wales number 2244297; Royal London Cash Management Limited, authorised and regulated by the Financial Conduct Authority and which provides investment management services, registered in England and Wales number 963229; Royal London Unit Trust Managers Limited, authorised and regulated by the Financial Conduct Authority and which manages collective investment schemes, registered in England and Wales number 2372439; Royal London Pooled Pension Company Limited, authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and the Prudential Regulation Authority and which provides pension services, registered in Scotland SC048729. All of these companies are subsidiaries of The Royal London Mutual Insurance Society Limited, registered in England and Wales number 99064. Registered Office: 55 Gracechurch Street, London, EC3V 0RL. rlam also includes Royal London Asset Management Bond Funds Plc, authorised and regulated by the Central Bank of Ireland, registered in Ireland number 364259. Registered office: 70 Sir John Rogerson’s Quay, Dublin 2, Ireland. Our ref: 654-PRO-09/2013-AB.
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Good thinking. Well applied.