The Fund aims to provide total returns, comprising of a high level of income with the opportunity for capital growth (i.e. to grow the value of your investment) over the long-term. The Fund targets a return of Overnight SOFR + 4% gross of fees over a full credit cycle. Credit cycles can vary in length and typically last between 3 and 7 years. While the Fund aims to achieve a positive return and its performance target, there is no guarantee that either will be achieved over the full credit cycle, or over any period of time. There is no guarantee that all capital invested in the Fund will be returned.
Expenses are charged to the capital account rather than to income, so capital will be reduced. This could constrain future capital and income growth and may be tax inefficient for investors in certain countries.
There is a risk that the issuers of fixed income investments (e.g. bonds) may not be able to meet interest payments nor repay the money they have borrowed. The worse the credit quality of the issuer, the greater the risk of default and therefore investment loss.
The use of derivatives may increase overall risk by magnifying the effect of both gains and losses leading to large changes in value and potentially large financial loss. A counterparty to a derivative transaction may fail to meet its obligations which may also lead to a financial loss.
These markets carry a higher risk of financial loss than more developed markets as they may have less developed legal, political, economic or other systems.
The Fund may invest more than 35% of its assets in securities issued or guaranteed by a permitted sovereign entity, as defined in the definitions section of the Fund’s prospectus.
On some investments any gains may be allocated to income rather than capital. This may cause greater fluctuations in the capital value of the fund. Income may be taxable.
The value of fixed income investments (e.g. bonds) tends to decrease when interest rates rise.
There may be insufficient buyers or sellers of particular investments giving rise to delays in trading and the ability to settle trades, and/or large fluctuations in value. This may lead to larger financial losses than might be anticipated.
Reference currency hedging aims to protect investors from a decline in the value of the reference currency only (the currency in which accounts are reported) and will not protect against a decline in the values of the currencies of the underlying investments, where these are different from the reference currency. In addition, where the currencies of the underlying investments are different from the reference currency, investors may suffer a loss when the value of the reference currency increases against the value of the share class currency. There can be no assurance that hedging strategies will be successful and such hedging can positively or negatively impact investors by inaccuracies in the operation of the hedge.