Rated Fund 2013-2017. Taking a conservative, safety first approach
This fund is a past Money Observer award winner. It is aimed primarily at investors seeking income and currently yields 3.9 per cent. But, like other income-oriented funds, it can be useful for growth investors who want to take a relatively cautious approach.
Investors who do not need the income can opt to have it reinvested. The fund has separate equity and bond portfolios, typically around 65 per cent and 35 per cent of the total portfolio respectively. Michael Clark is responsible for the equity portfolio and Ian Spreadbury for the bonds.
Clark aims to identify companies that support his SIRP (safety of income at a reasonable price) approach. They typically have two main characteristics.
The first is a decent-quality business, strong enough to withstand tough economic times. The second quality he looks for is the ability to generate sufficient cash flow to fund future growth and pay increasing dividends over time. He likes stable, defensive businesses that deliver low-volatility returns and steady capital growth.
Spreadbury, one of the UK's leading bond fund managers, invests mainly in UK gilts but has some flexibility to invest in corporate bonds. Within the corporate bond allocation, he emphasises selection of the right issuers and ensuring diversity.
The combination of a conservatively invested portfolio of equities and bonds is aimed at providing a low-volatility fund that provides growth in the good times, but limits the downside in the bad times. It has a good longer-term track record.