At the end of December we investigated alternatives to the Fixed Income funds that we currently use on Wrap. Our first recommendation was M&G Index-Linked Bond Fund which was first in its sector over 3 years and aims to secure the value of capital and income from the effects of inflation. Another Index-linked fund which provides similar protection from the effects of inflation and rising interest rates is the Standard Life Global Index-Linked bond. This fund is top in its sector over 3 years and has produced returns over the last 12 months of 7.8%.
We also looked at the Absolute Return sector. Absolute Return funds aim to provide positive investment returns in all market conditions through the ups and downs of the economic cycle. The sector average for the last 12 months has been 3.1%, however, Standard Life’s Global Absolute Return Strategy fund (GARS) has returned 11.6% over the same period.
We introduced these funds to our growth portfolios to replace three of our corporate bond funds. For income clients, we recommended a switch out of corporate bond funds and into property and equities to maintain the existing income yield.
In January, the FTSE 100 hit its first trigger point at 6000 and a recommendation to shelter 25% of UK Equity holdings via a programme of phased disinvestment to RISK FACTOR ONE was emailed to all Wrap clients.