Rathbone Unit Trust Management (Rathbones) will introduce its High Quality Bond Fund to a broader base of cornerstone UK investors, it has revealed.

The firm also said the fund, managed by Noelle Cazalis, will be made available to Continental European investors via a Luxembourg-domiciled SICAV “in due course”.
 
Rathbones says 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% 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.

The firm says 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% of the fund invested in securities with a credit rating of A- and above.

The remaining 20% 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%, with an income yield of 2.8% (average coupon), with income 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 share class will be made available across a number of mainstream platforms, it was confirmed.
 
The Rathbone High Quality Bond Fund sits in the Investment Association’s £ Corporate Bond sector.

As per the sector requirement, at least 80% 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, said: “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.”
 
He added: “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, said: “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.”