Royal London Asset Management plans to launch a monthly income bond fund later this year aimed mainly at IFAs’ clients and wealth managers.

The flexible remit fund will be in the Investment Association’s Sterling Strategic Bond sector and aims to deliver an annual income of 5% with some opportunities for capital growth.

The fund will be managed by RLAM’s head of fixed income Jonathan Platt.

It will invest in underlying Royal London credit and high yield portfolios, with the option to hold up to 30% of the portfolio in individual bonds and other fixed income securities. 

The fund will also be able to invest in unrated securities, gilts and foreign sovereign debt.

RLAM says that as part of RLAM’s established fixed income range, the new product exploits the “inefficiencies” inherent in credit markets which result from over-reliance on liquidity, credit ratings and orientation towards benchmarks.

The investment philosophy, focusing on value and security, aims to offer higher yields without compromising on risk management.

Mr Platt said: “This fund allows us to translate RLAM’s unique credit philosophy, with a strong emphasis on active management, rigorous analysis of fundamentals and genuine stock selection, into a flexible and diversified new offering.”

Phil Reid, head of wholesale at RLAM, added: “As we have expanded our distribution footprint in the advisory segment, many intermediaries are looking for investments paying a monthly income, which is how several of their clients manage their finances.

“We have seen a great deal of client demand for a solution that blends our existing credit capabilities to deliver this.”