A rigorous process – focused on liquidity & yield

A relative rise

As expected by the market, the Bank of England (BoE) embarked on its first monetary tightening cycle in a decade lastThursday, with the Monetary Policy Committee (MPC) voting to hike interest rates to 0.50%. Although this will be some relief for long-suffering savers, rates still remain incredibly low in a historical context. In this environment, the CF Canlife Sterling Liquidity Fund seeks to provide investors with an enhanced return relative to cash deposits, via a diversified, liquid and stable portfolio of assets.

Investment process

The Fund’s aims and objectives are highlighted in the graphic below. Essentially, we look to construct a portfolio that provides liquidity and secures price stability, whilst generating additional yield. To achieve this, the portfolio invests in overnight deposits and other money market funds, whilst also holding more yield-generative, longer-dated assets. We hold other money market funds to ensure liquidity, without compromising our overnight deposits or higher yield assets.  

Source: Canada Life Investments, as at 06/11/17. MMY = money market yield.

Portfolio construction

At Canada Life Investments, we have managed fixed income assets for more than 50 years. As a result, we are able to draw upon a significant credit research team – with global sector coverage – and our long experience in the markets has also enabled us to build up important relationships with brokers and other market participants. This results in a portfolio of highly liquid, highly tradable assets.

Source: Canada Life Investments, as at 30/09/17.

Outlook

With the uncertain economic and political outlook the UK is currently facing, we expect demand for efficient, secure vehicles for cash management to be well-supported. We currently manage c. £5 billion in short bond and liquidity mandates for a number of institutional clients, life and pension funds and OEIC investors and we believe our experience in this asset class allows us to focus on finding the most attractively valued opportunities in this space. Indeed, as long-term fixed income investors, with an emphasis on counterparties with strong fundamentals, it is our job in this environment to make our investors’ cash work as hard as possible, focusing on sustainable returns and capital protection.

Important Information

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.

Data Source – © 2017 Morningstar, Inc. All Rights Reserved. The information contained herein: (1) is proprietary to Morningstar and/or its content providers; (2) may not be copied or distributed; and (3) is not warranted to be accurate, complete or timely. Neither Morningstar nor its content providers are responsible for any damages or losses arising from any use of this information.

The Canada Life Investments blog page features images licensed from Getty Images International. These images shall not be downloaded, republished, retransmitted, reproduced or otherwise used in any way. Aside from the above, and unless otherwise stated, Canada Life retains copyright in and/or has a right to use all contents of this website (including text and graphics) and such contents shall not be copied, distributed, extracted or modified without the express prior written consent of Canada Life unless for private, non-commercial use.

CLI00997 Expiry 6 November 2018

Steve Matthews

Steve Matthews

Fund Manager, Liquidity

Andy Head

Andy Head

Assistant Fund Manager

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