Scottish Widows Investment Partnership's (SWIP's) expertise in fixed income fund management has been showcased by the stellar performance of the SWIP Sterling Short Term Fund as it passes its fifth birthday mark.
The Fund's outperformance can be attributed to its additional flexibility. By varying money market and credit asset allocations, as well as taking strategic interest rate positions, the Fund's managers, Douglas McPhail and Duncan Thomson, have ensured that the Fund has delivered a superior return whilst maintaining a high credit quality.
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The Fund has outperformed its benchmark index by 93 basis points[1] and produced an impressive annualised return of 4.24%[2] since launch.
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The Fund has been one of the best performers relative to its peer group, outstripping the IMMFA GBP Liquidity funds median by 59, 154, and 88 basis points over one, three and five years respectively[3].
This innovative Fund is designed for organisations that are looking to invest their stable cash balances over the longer term. It has proved highly attractive to local authorities, pension funds and insurance companies, with assets under management recently reaching £2 billion.
John Brett, Director of Sales & Marketing at SWIP, commented:
"The Sterling Short Term Fund forms part of SWIP's enhanced segregated cash management service, which is a unique offering for institutional investors, utilising the expertise across SWIP's fixed income teams. The underlying funds all work to complement each other, offering an easy-to-use and scalable approach to cash investing.
"Running the Sterling Short Term Fund against a long-term view has allowed SWIP's cash team to enhance the yield without taking unnecessary risks. This pooled Fund gives clients access to a wider range of assets than is usually permissible on a pure segregated basis. It also means the Fund has excellent buying power in the market."
SWIP has a rigorous investment process for managing cash portfolios, one that identifies and exploits attractive opportunities whilst minimising overall risk. Integral to the process is SWIP's long-standing commitment to conducting its own in-depth, fundamental research. Its dedicated cash and bond specialists interact closely on segregated mandates and, together with SWIP's in-house economists, develop a full understanding of the current factors affecting cash and fixed income markets.
Mark Connolly, Director of Fixed Income at SWIP commented:
"SWIP's fixed income team has an enviable track record in cash and bond fund management. It has demonstrated its expertise in various market conditions, as highlighted by the excellent performance of the SWIP Sterling Short Term Fund.
"Against this turbulent market backdrop cash funds are becoming increasingly popular. The benefits are clear: they're easy to set up and monitor; offer diversification of risk and a competitive yield; and can be accessed at short notice. At SWIP, we have ensured we provided a strong product that meets this investor demand. "
The SWIP Sterling Short Term Fund has achieved a fund credit rating and a fund volatility rating of AAA/V1 from Fitch, reflecting the Fund's high average credit quality and very low market risk. The Fund also boasts the highest ratings from Moody's (AAA/Mr1) and Standard & Poor's (AAAm).
SWIP has one of the strongest and most experienced fixed income investment teams in the UK, managing around £68 billion[4] in UK and international bonds, and cash investments.
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