Fidelity Worldwide Investments has launched an income share class of Ian Spreadbury’s reduced duration bond fund which will be aimed at retail investors, with £500 minimum investment.
The fund, called Fidelity MoneyBuilder Income Reduced Duration Fund, launched in January, offers investors a lower duration than Spreadbury’s flagship MoneyBuilder Income fund.
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The fund had an institutional Y accumulation share class with a £1 million minimum investment but interest from retail investors has led to the group launching the lower priced share class.
The newly launched income share class has a yield of 3.09%, compared to the £3.3 billion MoneyBuilder Income fund which has a higher yield of 3.7%.
Fidelity has launched this additional share class amid a renewed drive out of some areas of the fixed income market.
The fund is different from the MoneyBuilder Incomefund, because of a derivative overlay strategy which reduces the portfolio’s duration risk to roughly two years through the combination of gilt futures and interest rate swaps.
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By GlobalDataBen Waterhouse, head of UK retail sales at Fidelity, said: "We are seeing investors question the long-term outlook for fixed income, but strategic and shorter-duration bond funds have benefited from this as, rather than sell out of bonds entirely, advisers and their clients now keep their portfolios diversified across asset classes.
"Money coming out of the corporate bond sector is going to strategic or reduced duration strategies, and we think that will continue," Waterhouse added.
