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European Wealth launches first bond fund


European Wealth has launched its first fund, the European Wealth Sterling Bond Fund, which is aimed at both retail and institutional clients.

Designed to deliver a significantly higher return than cash deposits, the philosophy of the fund is to prioritise the return of cash before looking at the return on investments.
Tight guidelines have been placed on what the fund can invest in. In particular, there is a ban on sub investment-grade bonds and the use of derivatives. Likewise, there is a minimum percentage requirement for government guaranteed bonds held at any time as well duration limits.
The fund can only invest in straight forward, short dated and well rated bonds.
Nigel Marsh, the fund’s new manager and a former fund manager at New Star Asset Management, says: “When designing a bond fund, there is always a natural tendency to weight it towards the needs of institutional clients. However, when we listened to European Wealth’s private clients and the wider adviser community, it was evident that there is a genuine frustration about the returns being seen on medium to long term cash deposits from banks. We therefore saw a real opportunity to structure a Fund that could address the concerns of two very different audiences.”
The multiple share class structure of the fund offers different return profiles depending on the size of the investment made. As a result, retail investors are able invest alongside institutional clients. The fund is also ISA qualified.
“For our institutional clients – in particular, universities, charities and friendly societies – a key driver is the desire to reduce volatility in an environment of likely interest rate rises,” says Mash. “For retail investors, and holders of family money, the focus is very much on maximising returns. We believe our European Wealth Sterling Bond Fund has the ability to deliver both and therefore can fulfil an important role for a wide spectrum of investors when building a long-term balanced portfolio.”
Since its inception, the fund has outperformed the benchmark showing a total return of 10.20 per cent as at the end of 2013 versus the benchmark of 2.65 per cent.

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