The Royal London Global High Yield Fund and the Royal London Short Duration Global High Yield Fund will be structured as sub-funds under the Royal London Bond Fund umbrella. Both will invest primarily in sub-investment grade corporate debt issued by companies domiciled in the UK, Europe, Asia and the US.
The funds, managed by head of high yield Azhar Hussain with assistance from Stephen Tapley, will be domiciled in Dublin.
The Global High Yield Fund is targeting a return of 1% per annum above its benchmark, the BoAML BB-B Global Non-Financial High Yield Constrained Index. The Short Duration Global High Yield Fund is targeting 2% above its benchmark, three month LIBOR, and maintaining a duration position close to two years.
Hussain said: “High yield bonds offer diversification and good return characteristics. They have equity-like returns with lower risk, are generally less sensitive to interest rate moves and tend to perform well in the early stages of economic recoveries. The current economic environment of low growth and low interest rates is expected to continue for some time and provides a benign default climate, with default rates continuing to fall, benefiting from a virtuous cycle of refinancing.”
Royal London hit the headlines earlier this year following the departure of two key equities managers.
