Royal London Asset Management (RLAM) is launching a monthly income bond fund later this year.
The fund will invest in underlying Royal London credit and high yield portfolios with the option to hold up to 30 per cent of the resulting portfolio in individual bonds and other fixed income securities.
The fund will also be able to invest in unrated securities, gifts and foreign sovereign debt and will be managed by Jonathan Platt, RLAM's head of fixed income.
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."
The fund will aim to exploit inefficiencies inherent in credit markets caused by over-reliance on liquidity, credit ratings and orientation towards benchmarks to offer high yields without compromising on risk management, with a focus on value and security.
The fund will sit within the IA Sterling Strategic Bond sector and aim to deliver an income of 5 per cent and opportunities for capital growth.
Phil Reid, head of wholesale at RLAM, said many intermediaries are looking for investments paying a monthly income to reflect how clients manage their finances.
He said: "We have seen a great deal of client demand for a solution that blends our existing credit capabilities to deliver this.
"By pooling the cash flows available from a range of fixed interest asset classes and distributing these in a smooth and regular manner, the new fund will meet this demand for a sustainable level of income."
Minesh Patel, an adviser at EA Financial Solutions in London, said he prefers to get his bond exposure from strategic bond funds because of the extra flexibility those funds have during times of political uncertainty.
rachel.addison@ft.com
