Pursuing attractive returns across global bond markets

Investors able to identify and take advantage of opportunities across global bond markets, with the flexibility to respond dynamically as conditions change, can generate potential for attractive returns through different market conditions.

The Responsible Horizons Strategic Bond Fund aims to generate a return through a combination of income and capital returns, whilst taking ESG factors into account.

It can invest across global government and corporate debt markets, focusing on the best ideas identified by the portfolio managers in pursuit of an attractive return (see Figure 1).
 

The Fund exhibits a yield to maturity of 6.9%, with an average credit rating of BBB+ (as at 31 March 2025). However, for an actively managed fund, it is important to look beyond yields to consider whether a manager can deliver consistent returns.

The Fund measures its performance against the UK Investment Association Sterling Strategic Bond sector, because it represents a broad range of similar sterling-denominated bond funds that invest in corporate bonds. We believe the Fund’s track record, and outperformance relative to this peer group, demonstrates its potential for attractive returns over time (see Figure 2).
 

The case for a strategic bond approach

Bond markets encompass debt issued by entities ranging from national and local governments, multinational and local companies, supranational agencies, and more – based in markets around the world.

This means that at any one time, the best opportunities can vary across different segments of the market. This is clear from looking over the performance of different segments of the market over the last 20 years (see Figure 3).
 

Pursuing its goals via a responsible approach

The Responsible Horizons Strategic Bond Fund excludes investments in a range of sectors, including tobacco, controversial weapon production and coal power generation. It also has a minimum allocation to companies that are at least committed to achieving net zero by 2050, and invests a minimum proportion in green, social and sustainability bonds, known as ‘impact bonds’.

This means the Fund has a material allocation of 18.4% in impact bonds (as at 28 February 2025) – without compromising the Fund’s ability to generate income and returns, in our view.

For the sake of completeness, please note that the Fund can invest up to 30% of its portfolio in securities which do not demonstrate sustainability characteristics.

The value of investments can fall. Investors may not get back the amount invested. Income from investments may vary and is not guaranteed.
 

Past performance is not a guide to future performance.

Investment objective

To generate a return through a combination of income and capital returns, whilst taking environmental, social and governance ("ESG") factors into account.

Benchmark

The Fund will measure its performance against the UK Investment Association Sterling Strategic Bond Sector as a comparator benchmark (the "Benchmark"). The Fund will use the Benchmark as an appropriate comparator because it represents a broad range of similar Sterling denominated bond funds that invest in corporate bonds. The Fund is actively managed, which means the Investment Manager has discretion over the selection of investments, subject to the investment objective and policies as disclosed in the Prospectus.

Key risks associated with this fund

• Objective/Performance Risk: There is no guarantee that the Fund will achieve its objectives.
• Currency Risk: This Fund invests in international markets which means it is exposed to changes in currency rates which could affect the value of the Fund.
• Geographic Concentration Risk: Where the Fund invests significantly in a single market, this may have a material impact on the value of the Fund.
• Changes in Interest Rates & Inflation Risk: Investments in bonds/ money market securities are affected by interest rates and inflation trends which may negatively affect the value of the Fund.
• Credit Risk: The issuer of a security held by the Fund may not pay income or repay capital to the Fund when due.
• Emerging Markets Risk: Emerging Markets have additional risks due to less-developed market practices.
• Responsible Investing Risk: The investment policy for this Fund places restrictions on its exposure to certain sectors or types of investments to reflect its responsible investing approach. The Fund's performance may be negatively impacted due to these restrictions in comparison to funds which do not have these restrictions. The Fund will not engage in securities lending activities and, therefore, may forego any additional returns that may be produced through such activities.
• Credit Ratings and Unrated Securities Risk: Bonds with a low credit rating or unrated bonds have a greater risk of default. These investments may negatively affect the value of the Fund.

A complete description of risk factors is set out in the Prospectus in the section entitled "Risk Factors".