Royal London Sterling Extra Yield Bond: is it a strategic bond fund?

aroominyork

ColdIron wrote: »

What makes you think that 'its policy is corporate bond only'?
It's policy allows it to invest in investment grade bonds. They can be corporate bonds and government bonds

I thought an 'investment grade bond' only described corporate bonds. Are the terms investment grade and sub-investment grade also used to describe gilts?

firestone

aroominyork wrote: »

GAM's policy specifically mentions government bonds and although its main focus is junior bonds it does hold a small amount of gilts. So the same could not be said.

That's today the same may not be true in a month i assume

ColdIron

Investment grade bonds are those with a credit rating of AAA, AA, A,and BBB (different credit rating agencies have slightly different terms). It doesn't matter if they are companies or governments, it's a measure of their ability to meet their financial commitments. The Bank of England (gilts) is about AA so definitely not sub investment grade while Greece or Venezuela would be somewhat south of that

firestone

its probably in the strategic sector as its yield is not high enough for the high yield sector (as per an FT Adviser article )

aroominyork

OK ColdIron, that answers it - thanks. Some other funds specify corporate or government, eg GAM as mentioned above, which makes the policy remit clearer... to the likes of me!

Linton

aroominyork wrote: »

Agreed, and the fund's policy lets it invest in pretty much any corporate bond. But that's not my point: my point is that its policy is corporate bond only but it's benchmarked against the strategic rather than corporate fund sector.

It could be almost entirely corporate bond at the moment, perhaps because gilts wouldnt meet its return objective. At other times and under different circumstances its remit could lead it to invest almost entirely in gilts. A corporate bond fund wouldnt have this flexibility.

aroominyork

Linton wrote: »

It could be almost entirely corporate bond at the moment, perhaps because gilts wouldnt meet its return objective. At other times and under different circumstances its remit could lead it to invest almost entirely in gilts. A corporate bond fund wouldnt have this flexibility.

Understood, and my last post in reply to ColdIron's #14 acknowledges that I did not understand the fund's policy as permitting it to buy investment or sub-investment government as well as corporate bonds.

sorcerer

The issue with the strategic bond area, is that because they can invest anywhere in the bond area, one fund can be very different to another. I own Royal London Sterling Extra and Jupiter Strategic Bond, both are very different and pay very different yields. But both are in the same area.

rathernot

Does anyone consider a fund like this a viable alternative for the "government" bond part that most seem to advise?

I get how government bonds are supposed to protect you by bringing some safety but when returns are so low do they actually give much real world benefit?

aroominyork

sorcerer wrote: »

The issue with the strategic bond area, is that because they can invest anywhere in the bond area, one fund can be very different to another. I own Royal London Sterling Extra and Jupiter Strategic Bond, both are very different and pay very different yields. But both are in the same area.

Agreed - both sit within the strategic bond sector but seem to be chalk and cheese. RL's fund name seems to be a contradiction in terms: if it is chasing high yield, ie a focus on sub-investment grade bonds, does it really take a strategic 'pan-credit universe' approach and head for calm waters when it sees danger on the horizon?

PS You hold RL and Jupiter; I hold Sanlam Strategic and M&G Optimal - same issue as you.