Investec Asset Management has announced a change of investment focus and name of the existing Investec GSF High Income Bond Fund.

Now known as the Investec GSF Investment Grade Corporate Bond Fund, the Luxembourg-domiciled fund will mirror the investment process and current positioning of its sister fund, the UK-domiciled Investec Sterling Bond Fund, which is currently overweight in investment-grade bonds.

As yields on government bonds and cash deposits approach historic lows, both the Investec GSF Investment Grade Corporate Bond Fund and the Investec Sterling Bond Fund aim to provide investors with attractive higher yields relative to gilts or cash, without significantly greater risk, by investing in high-quality corporate bonds. There is also potential for capital gains.
 
Both funds will be run by John Stopford, Investec’s co-head of fixed income, and will take a top-down thematic approach combined with a bottom-up due diligence process and will cover a global opportunity set, including emerging market credit.

This aims to ensure optimum rating, and sector and country exposure aligned to the evolving business cycle. Interest rate exposure is then managed separately to seek maximum benefit to the portfolio.

Stopford says, ‘Following last year's dramatic and indiscriminate sell-off, we believe investment-grade corporate bonds stand out as showing exceptional value, over-compensating investors for the risk of potential default and delivering superior risk-adjusted returns. History suggests that investment-grade corporate bonds could outperform government bonds by up to ten per cent per annum over the next few years.

‘Yet, while it's clear that the big picture story is very compelling, the detail is also important. There is a need for investors to be selective; in building our targeted portfolio of between 60 and 100 high-quality issues, our flexible investment process allows us to ensure that we are confident that each position we take offers sufficient reward.’