Rathbone Unit Trust Management is to launch a Strategic Bond Fund on 3 October. It will be a diversified vehicle with exposure to both individual fixed income securities and collectives.

The target market is intermediaries seeking a fixed income multi-asset solution. 

The firm believes that with many individual issue sizes for bonds rising to above £100,000 (about $160,000) per issue, smaller clients are only able to take advantage of the full gamut of fixed income investments through pooled vehicles.

“This fund is a compelling solution for those seeking a diversified portfolio of fixed income securities, backed by a wealth of investment, strategic asset allocation and due diligence experience, which would be otherwise impossible to achieve for all but the largest accounts.  Demand is stronger than ever for funds that can apply robust strategic asset allocation expertise to the full spectrum of fixed income securities,” said Mike Webb, chief executive officer, RUTM.

“Our experience suggests that a single house rarely has best of breed talent across such a wide universe.  Our approach combines our expertise in the largely lower risk areas of direct investment in government and investment-grade bonds with our very credible track-record in fund selection within the more specialised areas of the market.  This approach also helps to lower the TER relative to other fund-of-funds solutions whilst offering a broader level of diversification than single strategy vehicles.”

Half the portfolio will typically be invested in sterling-denominated government bonds and investment grade corporate debt.  The remainder will be invested in collective investment vehicles, focused on specialist areas such as high yield and emerging market debt, distressed debt and credit alternatives on a best-of-breed basis. 

To try and reduce risk and volatility within the fund, up to 20 per cent of the total portfolio can be invested in off-benchmark assets such as qualifying alternative fixed income funds and qualifying structured products.