The fund aims to provide a combination of capital growth and income to deliver a return that is higher than that of the global high yield bond market over any five-year period.
Investment policy and strategy
Core investment: At least 80% of the fund is invested in high yield bonds issued by companies located in any country, including emerging markets*, which may be denominated in any currency.
Other investment: The fund may also invest in bonds issued by governments, investment grade corporate bonds, asset-backed securities, cash and assets that can be turned quickly into cash.
Use of derivatives: Derivatives may be used to invest indirectly in bonds. Derivatives may also be used to manage risks and reduce costs, as well as to offset the impact of currency exposures arising from the fund’s non-US dollar investments.
For more information on the types of bonds held and derivatives used, please refer to the Prospectus.
* Emerging market countries are defined as those included within the MSCI Emerging Markets Index and/or those included in the World Bank’s definition of developing economies, as updated from time to time.
Strategy in brief: The fund is a flexible global high yield bond fund. The investment manager selects investments based on in-depth analysis of individual bond issues, combined with an assessment of macroeconomic factors such as economic growth, interest rates and inflation. The investment manager is assisted in the selection of individual bonds by an in-house team of analysts.
Performance comparator: The fund is actively managed. The BofA Merrill Lynch Global High Yield Index (USD Hedged) is a point of reference against which the performance of the fund may be measured.
Asset-backed securities: Bonds backed by assets that produce cashflows, such as mortgage loans, credit card receivables and auto loans.
Bonds: Loans to governments and companies that pay interest.
Derivatives: Financial contracts whose value is derived from other assets.
High yield bonds: Bonds issued by companies considered to be riskier and therefore generally paying a higher level of interest.
Investment grade bonds: Bonds with a medium or high credit rating from a recognised credit rating agency. They are considered to be at lower risk from default than bonds with lower credit ratings.
Risks associated with the fund
The value and income from the fund's assets will go down as well as up. This will cause the value of your investment to fall as well as rise. There is no guarantee that the fund will achieve its objective and you may get back less than you originally invested.
Investments in bonds are affected by interest rates, inflation and credit ratings. It is possible that bond issuers will not pay interest or return the capital. All of these events can reduce the value of bonds held by the fund.
High yield bonds usually carry greater risk that the bond issuers may not be able to pay interest or return the capital.
The fund is exposed to different currencies. Derivatives are used to minimise, but may not always eliminate, the impact of movements in currency exchange rates.
The fund may use derivatives to profit from an expected rise or fall in the value of an asset. Should the asset's value vary in an unexpected way, the fund may lose as much as or more than the amount invested.
The hedging process seeks to minimise, but cannot eliminate, the effect of movements in exchange rates on the performance of the hedged share class. Hedging also limits the ability to gain from favourable movements in exchange rates.
In exceptional circumstances where assets cannot be fairly valued, or have to be sold at a large discount to raise cash, we may temporarily suspend the fund in the best interest of all investors.
The fund could lose money if a counterparty with which it does business becomes unwilling or unable to repay money owed to the fund.
Further details of the risks that apply to the fund can be found in the fund's Prospectus.
The fund may invest more than 35% in securities issued by any one or more of the governments listed in the fund prospectus. Such exposure may be combined with the use of derivatives in pursuit of the fund objective. It is currently envisaged that the fund’s exposure to such securities may exceed 35% in the governments of Australia, Austria, Belgium, Canada, Denmark, Finland, France, Germany, Italy, Japan, Netherlands, Singapore, Sweden, Switzerland, UK, USA although these may vary subject only to those listed in the prospectus. This fund allows for the extensive use of derivatives.