Aberdeen Life Long Dated Corporate Bond Fund
Objective
The Fund aims to maximise total returns primarily from investment in pound Sterling denominated (or, from such time as the UK participates in the single European currency, Euro denominated) Debt and Debt Related Securities.
Manager's Quarterly Report
July 2010
Market review
- News flow in the UK was dominated by the General Election and ongoing concerns about Euro
area debt problems.
The Bank of England left the base rate unchanged at 0.5% during the quarter and maintained
the asset purchase target at £200bn. However, the minutes from the meeting in June
highlighted the first split in voting since February 2009, with Andrew Sentance dissenting in
favour of a 0.25% increase, based on a combination of inflation resilience in the UK and signs
of global recovery.
Long dated sterling credit underperformed government bonds, with spreads widening by
0.27% to end the quarter at 1.61% over gilts, despite companies generally reporting improved
performance. Sovereign debt concerns overshadowed credit fundamentals causing a drag on
performance.
Fund review
- The fund underperformed over the quarter. Security selection within credit detracted value. We
remain overweight credit risk, specifically in sub-ordinated financials, but trimmed down our
financial holdings.
Within interest rates, a short duration position and a yield curve flattening position both
detracted value.