Trading Updates 20/08/2019
Trading Update - 20 August 2019
Further trading has taken place in the funds in August. Purchased: Royal London Enhanced Cash Plus Fund and 5.5% 15/08/28 US Treasury, Sold: Vanguard FTSE Developed Europe ex UK ETF
Purchased: Royal London Enhanced Cash Plus Fund
The Royal London Enhanced Cash Plus Fund is a low-risk fixed income strategy that we believe offers relatively attractive risk-adjusted returns amid deteriorating fundamentals observed across most mainstream global bond markets following the recent fall in yields. The Fund combines cash deposits and money market securities with short duration, high quality investment grade corporate bonds, covered bonds and asset-backed securities. The strategy aims to generate a net yield of 1-1.25% in excess of short term interest rates. It is managed by the highly regarded Cash Solutions team at Royal London and has exhibited very low volatility and drawdowns since launch in 2015.
Purchased: 5.5% 15/08/28 US Treasury
For the funds with a higher equity exposure (Managed Growth, Growth and Progressive), we have initiated a modest position in the 5.5% 15/08/28 US Treasury. The US government bond is yielding a positive return, which is guaranteed if held to maturity and acts as a hedge against a further deterioration in global economic growth and the risk that the US Dollar will strengthen (due to its ‘safe haven’ qualities), despite the best efforts of President Trump. The position will also benefit the fund if Sterling continues to weaken in the lead up to the Brexit denouement.
Sold: Vanguard FTSE Developed Europe ex UK ETF
The funds’ position in the Vanguard FTSE Developed Europe ex UK ETF has been sold out of all the funds (except Progressive, where a residual holding is maintained).The decision to reduce exposure to European equities was taken as we do not believe that taking interest rates further into negative territory will be beneficial for the European economy, and the willingness of policymakers to aggressively recapitalise the banking sector and introduce a meaningful (Eurozone wide) fiscal policy boost continues to be lacking.
Cornelian Investment Team