Open main menu
Home
Random
Donate
Recent changes
Special pages
Community portal
Preferences
About Stockhub
Disclaimers
Search
User menu
Talk
Contributions
Create account
Log in
Editing
L&G Absolute Return Bond Fund
(section)
Warning:
You are not logged in. Your IP address will be publicly visible if you make any edits. If you
log in
or
create an account
, your edits will be attributed to your username, along with other benefits.
Anti-spam check. Do
not
fill this in!
== Objectives and investment policy == The objective of the Fund is to provide a combination of growth and income above those of the ICE BofA SONIA 3-Month Constant Maturity Total Return Index<ref>Three Month SONIA Index Futures Contract is a cash settled future based on the interest rate on a three month sterling deposit. SONIA stands for Sterling Over Night Index Average. A three-month sterling deposit is a type of short-term deposit account denominated in British pounds (GBP) that typically earns interest over a three-month period. This type of deposit is often used by individuals and businesses to earn a guaranteed rate of return on their cash reserves, while still maintaining easy access to their funds. The interest rate earned on a three-month sterling deposit may be fixed or variable, depending on the terms of the deposit account. Fixed-rate deposits offer a guaranteed rate of return for the entire term of the deposit, while variable-rate deposits may offer a higher or lower interest rate depending on market conditions. Three-month sterling deposits are a relatively low-risk investment, as they are typically insured by the government up to a certain amount (such as £85,000 per depositor per institution in the UK under the Financial Services Compensation Scheme). However, the interest rates on such deposits may be relatively low compared to other types of investments, such as stocks or bonds. As with all investments, it is important to carefully consider the risks and benefits before making any investment decisions.</ref>, the "Benchmark Index". The Fund is actively managed and aims to outperform the Benchmark Index by 1.5% per annum. This objective is before the deduction of any charges and measured over rolling three year periods. The Fund aims to deliver this objective while decarbonising the portfolio over time, targeting a 50% reduction in weighted average carbon intensity by 2030, compared to a December 2019 baseline level. The Fund aims to generate positive returns in all market conditions. There can be no assurance that the Fund will achieve its investment objective. The Manager has broad discretion over the composition of the Fund’s portfolio. The Fund will invest predominantly in fixed income securities. These include bonds and other debt instruments, issued in a variety of currencies by companies and governments from around the world. In addition to decreasing the weighted average carbon intensity over time, the Fund promotes a range of environmental and social characteristics by: * Excluding investments in bonds issued by companies in the LGIM Future World Protection List ("FWPL"). * Excluding companies from the Fund which do not meet the Manager’s “Climate Impact Pledge”, in order to encourage strong governance and sustainable strategies. The Fund will invest primarily in debt rated by a recognised rating agency as investment grade (rated as lower risk). It may also invest in debt rated as sub-investment grade (rated as higher risk). The Fund may also invest in unrated bonds which have not been rated by a credit rating agency. The Fund may also invest in other transferable securities, including but not limited to, depository receipts, permitted deposits, money market instruments, cash, near cash and units in collective investment schemes. The absolute return philosophy is focused on capital preservation and minimising falls in value. In order to achieve consistent positive returns, significant emphasis is placed on risk management and avoiding downside scenarios. The Fund will use derivatives extensively for investment purposes or to reduce risk or cost or to generate additional growth. Derivatives are financial instruments whose values are based upon the price of one or more other asset(s). Usage of derivatives is monitored to ensure that the Fund is not exposed to excessive or unintended risks. The financial derivative instruments that the Fund may invest in include the following: Spot and Forwards contracts<ref>A spot contract is a type of financial agreement between two parties to buy or sell an asset, such as a commodity, currency or security, at the current market price for immediate delivery or settlement. In other words, the transaction is settled "on the spot," usually within two business days. For example, if you buy gold on a spot contract, you would pay the current market price and receive delivery of the gold within two business days. A forward contract, on the other hand, is an agreement between two parties to buy or sell an asset at a predetermined price on a future date. Unlike a spot contract, a forward contract is not settled immediately, but at a future date, which is typically several months or even years later. The price of the asset in a forward contract is set at the time the contract is made, and it is not affected by any subsequent changes in the market price of the asset. For example, if you enter into a forward contract to buy wheat at a predetermined price six months from now, you are protected against any price fluctuations that may occur during that period.</ref>, Credit Default Swaps<ref>A Credit Default Swap (CDS) is a financial derivative instrument that allows investors to protect themselves against the risk of default on a particular debt obligation, such as a bond or loan. In a CDS, one party (the protection buyer) pays a periodic premium to another party (the protection seller) in exchange for protection against the risk of default by a third party (the reference entity) on a specific debt obligation. If a default event occurs, the protection buyer receives compensation from the protection seller, typically in the form of the difference between the face value of the debt obligation and its market value at the time of default. The amount of compensation is determined by the terms of the CDS contract, including the notional amount of the debt obligation, the premium payment frequency, and the maturity date. CDSs can be used by investors as a way to hedge against credit risk, or as a way to speculate on the creditworthiness of a particular issuer or sector. However, CDSs can also be a source of systemic risk, as they can amplify the impact of credit events and contribute to market instability if used excessively or improperly.</ref> and Exchange Traded Futures<ref>Exchange-traded futures are standardized contracts that allow traders to buy or sell an underlying asset at a predetermined price and date in the future. These contracts are traded on a regulated exchange and are settled through a clearinghouse. The underlying asset for a futures contract can be a commodity (such as oil, gold, or corn), a financial instrument (such as a stock index or currency), or even an intangible asset (such as weather or electricity). When a trader buys a futures contract, they are agreeing to buy the underlying asset at a specific price and date in the future. When a trader sells a futures contract, they are agreeing to sell the underlying asset at a specific price and date in the future. The price of the futures contract is determined by the market demand for the underlying asset and may fluctuate based on various factors such as supply and demand, geopolitical events, or market sentiment. Exchange-traded futures provide traders with a way to speculate on the price movements of various assets and manage their risk exposure to those assets. Futures contracts can be bought and sold before their expiration date, allowing traders to realize profits or losses based on the difference between the purchase price and the current market price. Because futures contracts are standardized, they are highly liquid and can be traded easily on an exchange.</ref>. The Fund may enter into repurchase agreement and reverse repurchase agreement transactions which consist of the purchase and sale of securities whereby the seller has the obligation to repurchase from the acquirer. Some investments held by the Fund may be issued in currencies other than sterling. The Fund may use a technique known as currency hedging to seek to protect against exchange rate movements between other currencies and Pounds Sterling. The Fund may invest up to 20% of its assets in asset-backed securities (ABS)<ref>An asset-backed security (ABS) is a security whose income payments, and hence value, are derived from and collateralized (or "backed") by a specified pool of underlying assets.</ref> and mortgage-backed securities (MBS)<ref>A mortgage-backed security (MBS) is a type of asset-backed security (an 'instrument') which is secured by a mortgage or collection of mortgages.</ref>. The Fund may invest up to 20% of its assets in contingent convertible debt securities. === Other information: === The Fund is actively managed as the Manager uses their expertise to select investments to achieve the Fund’s objectives. The Fund promotes a range of environmental and social characteristics. Further information on how such characteristics are met by the Fund can be found in the Supplement. Your shares will be accumulation shares. Income from the Fund’s investments will be reinvested back into the value of your shares. This Fund is designed for investors looking for income or growth from an investment in fixed income securities. Although investors can take their money out at any time, this Fund may not be appropriate for those who plan to withdraw their money within five years. This Fund is not designed for investors who cannot afford more than a minimal loss of their investment. If you do not understand this document we recommend you seek additional information to help you decide if this Fund is right for you. Shares can be bought, sold or switched on any business day. Orders received by 2.00pm (CET) will be processed as at the valuation point on the same business day. Orders received after 2.00pm (CET) will be processed as at valuation point on the next business day. The Fund's base currency is denominated in sterling (GBP).
Summary:
Please note that all contributions to Stockhub may be edited, altered, or removed by other contributors. If you do not want your writing to be edited mercilessly, then do not submit it here.
You are also promising us that you wrote this yourself, or copied it from a public domain or similar free resource (see
Stockhub:Copyrights
for details).
Do not submit copyrighted work without permission!
Cancel
Editing help
(opens in new window)