Standard Life launches corporate bond fund

Daniel McKernan

Edinburgh-based Standard Life Investments (SLI) has launched a short-dated corporate bond fund to invest predominantly in sterling-denominated corporate bonds with a maturity of less than five years.

The fund aims to “address the potential for significant drawdown that an increase in fixed income market volatility could bring.”

With core government bond yields at, or close to their lows, investors have become increasingly worried about the price impact that rising interest rates will have on their fixed income allocations, SLI said.

“By utilising our strong global stock selection process and focusing on shorter-dated corporate securities, the fund aims to reduce the impact of rising yields, while still targeting a better return and income than similar maturity government bonds.”

The fund will be managed by Daniel McKernan, head of sterling investment grade credit, and Mark Munro, investment director, credit.

McKernan said: “With macro uncertainty increasing and evidence that we are drawing towards the end of the credit cycle, we would expect to see an increase in volatility in both government and credit markets.

“While short-dated corporate bonds are not immune to any increase in market volatility, we believe that they offer an excellent risk-adjusted option for investors.”