A new fund for cost conscious investors
Launched on 22 March 2013, with retail share classes available on 2 April 2013, the UBS Sterling Corporate Bond Indexed Fund aims to achieve returns that are consistent with the performance of the Market iBoxx Sterling Non-Gilts Index by predominantly investing in fixed income securities.
Since full replication of the index is not practical, we utilise our securities analysis and trading capabilities through stratified sampling (see Jargon Buster below), that produces characteristics within the sample that are proportional to the overall universe.
The Fund aims to achieve a target tracking error of +/- 35bps. This is expected to be achieved during normal market conditions but is not guaranteed. The primary goal of a passive fixed income strategy is to minimise tracking error relative to a specific index or benchmark. Tracking error indicates how closely the fund tracks its benchmark. The lower the number, the closer the fund follows the benchmark.
For those investors looking for income, the Fund will pay distributions on a quarterly basis.
As the annual management fee of the Fund is charged to capital, the potential capital growth of the Fund will be reduced.
Bonds carry varying levels of underlying risk, including default risk, dependent upon their type. These range from gilts, which carry limited levels, to speculative/non-investment grade corporate bonds that carry higher levels of risk but with the potential for greater capital growth.
What is stratified sampling?
Where an index contains a large number of securities, such as bonds or equities, it may be costly and inefficient to buy every single one. Stratified sampling aims to buy a range of securities in the index, which closely match its characteristics, without the need to hold every security in the index.