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Rathbone Unit Trust Management introduces Rathbone High Quality Bond Fund to wider market


Following the successful launch of the Rathbone High Quality Bond Fund to cornerstone investors, Rathbone Unit Trust Management (Rathbones), is now introducing the fund to a broader base of investors in the UK.

The fund is managed by Noelle Cazalis and will be made available to Continental European investors via a Luxembourg-domiciled SICAV in due course.
The objective of the fund is to focus on capital preservation while seeking to pay income over any three-year period through a portfolio of high quality, liquid bonds. The fund aims to invest 80 per cent in A- or above rated bonds. For performance comparison only, the benchmark will be the iBoxx £ Overall A 1-5 year, reflecting the average credit quality of the fund as well as the short-to-medium term maturity of its holdings. The fund has no duration constraint.
Investors should be willing and able to commit to an investment horizon of at least three years and preferably longer.
The fund typically invests in global corporate and G10 government bonds, with at least 80 per cent of the fund invested in securities with a credit rating of A- and above. The remaining 20 per cent may be invested at the manager’s discretion in government bonds, non-rated bonds or BBB-rated investment grade bonds. The fund’s current yield to maturity is 1.27 per cent, with an income yield of 2.8 per cent (average coupon). Income is paid quarterly.
Noelle Cazalis is supported in credit analysis and selection by the broader fixed income team, led by Rathbones’ head of fixed income, Bryn Jones. 
The new I-class shares are available, which are available with an Annual Management Charge of 0.35 per cent, OCF (capped) of 0.50 per cent, and total MiFID II charges of 0.54 per cent, will be made available across a number of mainstream platforms.
The Rathbone High Quality Bond Fund sits in the Investment Association’s £ Corporate Bond sector. As per the sector requirement, at least 80 per cent of the portfolio must be invested in sterling denominated bonds or hedged back to sterling. For the purposes of the new fund, it is envisaged that all non-Sterling denominated positions will be hedged back to Sterling.
Mike Webb, chief executive, Rathbone Unit Trust Management, says: “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. Building on the success of Rathbones’ fixed income franchise, we believe the Rathbone High Quality Bond Fund meets that requirement, as well as adding value to the ‘sleep-easier’ part of their portfolios.
“Noelle has worked with the fixed income team for many years now and has been an invaluable asset to the existing bond funds and the wider research team.”
Noelle Cazalis, fund manager, Rathbone High Quality Bond Fund, says: “As the outlook for rates is uncertain and as we near the back end of the credit cycle, we aim to provide a cautious option within fixed income portfolios. We believe investors only have a limited number of options to de-risk, so the fund should add to their tool-kit. By focussing on high quality credit names, the fund should help to limit maximum drawdowns in portfolios when markets are jittery. In the meantime, the yield offers a meaningful pick-up versus cash.” 

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