As manager of the Sterling Liquidity Fund, I always keep my eyes out for gilt-edged investment opportunities to help preserve capital. In fact, with UK Treasury Bills yielding as much as A rated bank CDs of late, we have been adding these lower-risk gilt-edged bonds to the portfolio to the extent that at both the 31st of August and the 30th of September, Her Majesty’s Government was the Fund’s largest counterparty exposure.
In our integrated five-step investment cycle, we focus on ensuring next-day liquidity, providing yield, adding government assets, securing price stability and maintaining a maturity ladder. The market conditions in the past few months have seen UK Government assets meeting all five of these criteria within the same investment – a gilt-edged government bow tied up neatly with competitive yields, stable pricing, weekly maturities and same-day trading and settlement.
Having said this, we remain vigilant for opportunities to enhance yield on a risk-adjusted basis over and above that available from standard money market offerings. With input from our internal credit analysis team, we also recently added the A rated Northern Powergrid January 2020 bond to our holdings at yields in excess of 1%. We like this bond because it is a company with both a clear and stable regulatory regime and a monopoly position in electricity distribution in licensed regions of the North of England. With sustainable cash-flow and a strong balance sheet, it is yielding 25bps more than similarly rated money market bank assets.
The LF Canlife Sterling Liquidity Fund is designed to provide institutional investors with a high degree of capital security and daily liquidity with the ultimate aim of delivering enhanced returns relative to short-term bank deposits. It stands out within Canada Life Investments’ well-rounded product range because of its day-to-day active management strategies as well as its AAAf/S1 rating from Fitch Ratings. For more information and the latest factsheet click here
Past performance is not a guide to future performance. The value of investments may fall as well as rise and investors may not get back the amount invested. Income from investments may fluctuate.
The information contained in this document is provided for use by investment professionals and is not for onward distribution to, or to be relied upon by, retail investors. No guarantee, warranty or representation (express or implied) is given as to the document’s accuracy or completeness. The views expressed in this document are those of the fund manager at the time of publication and should not be taken as advice, a forecast or a recommendation to buy or sell securities. These views are subject to change at any time without notice. This document is issued for information only by Canada Life Investments. This document does not constitute a direct offer to anyone, or a solicitation by anyone, to subscribe for shares or buy units in fund(s). Subscription for shares and buying units in the fund(s) must only be made on the basis of the latest Prospectus and the Key Investor Information Document (KIID) available at www.canadalifeinvestments.com. This fund is a UCITS scheme and a standard variable net asset value (VNAV) money market fund (MMF). The MMF is not a guaranteed investment, nor does it receive external support to guarantee its liquidity. Unlike bank deposits, investment in MMFs can fluctuate and investors’ capital is at risk.
Canada Life Investments is the brand for investment management activities undertaken by Canada Life Asset Management Limited, Canada Life Limited and Canada Life European Real Estate Limited. Canada Life Asset Management Limited (no. 03846821), Canada Life Limited (no.00973271) and Canada Life European Real Estate Limited (no. 03846823) are all registered in England and the registered office for all three entities is Canada Life Place, Potters Bar, Hertfordshire EN6 5BA. Canada Life Asset Management is authorised and regulated by the Financial Conduct Authority. Canada Life Limited is authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and the Prudential Regulation Authority.
CLI01508 Expiry on 31/12/2019