Aberdeen Life Sterling Credit Fund
Formerly Aberdeen Life Corporate Bond Fund
Objective
To achieve an attractive level of total return with the majority of the Fund invested in Sterling denominated non- government investment grade debt and debt-related securities. The Fund may achieve this by investing partly or entirely in one or more collective investment schemes.
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.
Sterling credit underperformed government bonds, with spreads widening by 0.38% to end
the quarter at 1.95% over gilts, despite companies generally reporting improved performance.
Sovereign debt concerns overshadowed credit fundamentals causing a drag on performance.
Fund review
- The fund outperformed modestly over the quarter. Security selection within credit added
value. We remain overweight credit risk, specifically in sub-ordinated financials. We exited our
position in US mortgages and trimmed down our financial holdings over the period.
Within interest rates, a short duration position and a yield curve flattening position both
detracted value.