He points out: “The management of a strategic bond fund is more complicated than that of a more traditional gilt or corporate bond fund, but the concept of having a wider degree of freedom to seek out the best investment opportunities and avoid problem areas within fixed income markets is reasonably straightforward to understand.”
And he believes that if investors can understand how multi-asset funds work, they will also grasp the concept of strategic bond funds.
Mr McGowan adds: “Many average investors can understand the benefits of multi-asset funds, where the ability to diversify across equity, fixed income and property across the world gives diversification benefits. Strategic bond funds use many of the same principles, but within fixed income markets.”
This view is reflected by Mr Megjhi, who says: “Strategic bond funds can be complicated for investors to understand because the sector is ‘broadbrush’ and there are so many different types of fund. But if they are simply looking for a fund allowed to find value across the whole fixed income market, then the premise is actually quite simple.”
To sum up, it seems that the more investors understand about strategic bond funds the better, but they do not have to rely on getting to grips with the details on their own.
Mr Bramley confirms: “We let investors know that we are here to help with their queries”, he emphasises.
A degree of trust is also required, according to McDermott: “They do say you should never buy what you don’t understand,” he observes: “But investors should bear in mind that fund managers are highly skilled at their profession and trust that they know what they are doing.”
Fiona Nicolson is a freelance financial journalist
