Strategic Gilt Fund

The fund aims to offer a superior risk-adjusted return over that of passively

holding a conventional gilt portfolio with similar risk characteristics.

31 January 2010

Key points

  • The fund invests only in UK gilts. There is no corporate exposure of any kind.
  • The fund utilises the Charteris process of writing options on the underlying portfolio, with the aim of enhancing the total risk-adjusted return of the portfolio and reducing volatility.
  • The fund was launched on 8 December 2006 and is managed by Ian Williams of Charteris Treasury Portfolio Managers.
  • Sector: IMA UK Gilts

Current views

Last month’s announcement of 0.1% positive quarter-on-quarter growth, after six quarters of contraction, speaks to the fragile nature of the UK economic recovery. We believe that the key to positive gilt demand in 2010 will be the weakness of the underlying economy.

Since January 1st, the FTSE 100 is down approximately 8% as many investors actively question the premise of the economic recovery. We expect there could be further retracement in equities and a much more stable gilt market than is currently built into most forecasts.

Regardless of the precise terms of the fiscal austerity package it will be challenging to rein in government spending, whilst simultaneously ending QE without inhibiting growth and risking a double dip back into recession. We do not expect the gilt market to collapse and believe that the market could surprise investors by performing better than anticipated.

– 5 February 2010

Awards

Holdings

UKT 4.00% 2022
UKT 3.75% 2019
UKT 5.00% 2025
UKT 4.00% 2016
UKT 2.75% 2015
UKT 4.25% 2032
UKT 3.25% 2011

Financial information

Nav Class A Acc 140.66p
Nav Class A Inc 132.41p
Nav Class B Acc 142.92p
Nav Class B Inc 132.65p
Total net assets £72.5m
Modified duration of the fund 6.5

Performance vs IMA UK Gilts sector

Five-year performance

Year- Calendar year
to-date 2009 2008 2007 2006 2005
Class A 0.99 1.79% 10.85% 6.47% n/a n/a
Class B 1.02 2.26% 11.90% 6.63% n/a n/a
IMA UK Gilts sector 0.57 -2.51% 11.76% 2.85% n/a n/a
IMA UK Gilts sector ranking 2/26 1/24 19/25 1/24 n/a n/a
Quartile 1 1 3 1 n/a n/a

Fund facts

ISIN Class A Acc GB00B1GVSD23
ISIN Class A Inc GB00B1GVQ612
ISIN Class B Acc GB00B1GVZG47
ISIN Class B Inc GB00B1GVWL84
Bloomberg tickers
Class A Acc CFILQAA LN
Class A Inc CFILQAI LN
Class B Acc CFILQBA LN
Class B Inc CFILQBI LN
Distribution Semi annual
31 May & 30 November
Dealing/valuation frequency Daily
Accounting year-end 30 September
Settlement T+4
EU Savings Directive In scope
Currency GBP
Annual charge class A 1.25%
Minimum initial Class A £1,000
Annual charge Class B 0.75%
Minimum initial Class B £7.5M
Initial charge 5.00%
ISA wrapper Yes
ISA transfer Yes
Savings plan Yes
Sector IMA UK Gilts
Depositary
BNY Mellon Trust & Depositary (UK) Limited
Registrar
Capita Financial Administrators