The Smith & Williamson Short-Dated Corporate Bond Fund is arguably one of the best kept secrets in the fixed-interest space. Domiciled in Ireland, the fund does not sit within any of the Investment Management Association (IMA) sectors and as such often misses investors' radars.
But with the Bank of England base rate at historic lows and calls for a further cut, investors could do well to invest in this safe-haven fund. The Smith & Williamson Short-Dated Corporate Bond Fund aims to achieve income returns greater than the base rate by investing in a variety of sterling, US dollar and euro short-dated investment grade corporate bonds of no more than six years maturity. It may also invest up to a maximum of 30 per cent of its net assets in government agency or supranational bonds and short-dated gilts.
While many investors prefer to stick with familiar fixed-interest houses such as M&G and Invesco Perpetual, this fund's focus on high-quality, short-dated bonds is likely to stand it in good stead should the eurozone crisis deteriorate further.
The fund was launched in April 2009 and is jointly managed by Ian Kenny and Chris Lynas, both experienced fixed-interest managers, having spent more than 15 years in Smith & Williamson's fixed-interest team. The fund has posted an impressive three-year performance of around 18 per cent, significantly ahead of the three-month Libor benchmark, which as delivered only around 2.5 per cent over the same period. It also has a reasonable total expense ratio of 1 per cent.
Download factsheet on S&W short-dated corporate bond fund here (PDF).
| SMITH & WILLIAMSON SHORT-DATED CORPORATE BOND FUND A | |||
| PRICE: | £1.06 | 3-YR SHARPE RATIO: | 2.49 |
| TRUSTNET SECTOR: | Fixed interest – sterling | PERFORMANCE YEAR TO DATE: | 1.90% |
| FUND TYPE: | Offshore Oeic | 1-YEAR PERFORMANCE: | 5.17% |
| FUND SIZE: | £363.59mn | 3-YEAR PERFORMANCE: | 18.30% |
| No OF HOLDINGS: | 62 | TOTAL EXPENSE RATIO: | 1.00% |
| SET-UP DATE: | 2 March 2000 | YIELD: | 3.80% |
| MANAGER START DATE: | 29 April 2009 | MINIMUM INVESTMENT: | £1,000 initial, £500 thereafter |
| 3-YR BETA: | 0.2 | MORE DETAILS: | sandwfunds.com |
Source: Investors Chronicle funds data & Smith & Williamson
Performance figures as at 11 June 2012
Top 10 holdings (as at 31 May 2012)
| Company | Percentage (%) |
| UK 8% | 3.65 |
| UK 1.75% | 2.91 |
| UK 5% | 2.91 |
| Marks & Spencer 6.25% | 1.53 |
| GlaxoSmithKline Cap 1.5% | 1.53 |
| Experian Fin 5.625% | 1.52 |
| AstraZeneca 5.9% | 1.51 |
| FirstGroup 6.875% | 1.51 |
| WPP 2008 6% | 1.51 |
| Severn Trent Fin 6% | 1.51 |
Credit Rating Breakdown
| Credit Rating | Percentage (%) |
| AAA | 11.40 |
| AA | 11.50 |
| A | 39.20 |
| BBB | 34.00 |
| Not Rated | 1.50 |
| Cash | 2.40 |
