RLAM Fixed Interest Investment

Market Leaders in Fixed Interest Investment

Good thinking. Well applied.

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An approach that gives us an edge

Royal London Asset Management (RLAM) has a highly experienced fixed interest team that has developed a reputation as one of the UK’s leading managers of government and credit bonds and has delivered strong performance through changing economic conditions and business cycles. Our success is based on a deep understanding of our clients’ investment objectives and the use of our in-depth market knowledge to exploit investment opportunities that help us meet these aims.

The experience and skill of our fund management team sets us apart and gives us an edge in a highly competitive market.

We add value by using our experience and exploring parts of the market that others overlook. Our product range includes a wide variety of strategies covering government debt, investment grade and high yield. These strategies can be accessed through both our pooled fund range and as segregated portfolios. We are also able to offer bespoke solutions covering buy & maintain credit and LDI. Delivering outstanding and consistent performance The combination of a high quality team and a robust, repeatable process have enabled us to deliver consistent and outstanding performance in both pooled and segregated fixed interest portfolios during a wide variety of economic and market conditions. Across the fixed interest spectrum, many of our funds and mandates have outperformed their benchmarks over shorter and longer term time horizons. Our many industry awards are further testament to the strength of our proposition.

We add value through actively managing asset allocation as well as through stock selection within government and credit bonds.

Established philosophies for government bonds and credit Although we believe that government bond markets are relatively efficient, as active fund managers we are nonetheless able to take advantage of valuation anomalies as they occur, particularly in light of the unprecedented conditions that 2

have resulted from Quantitative Easing. We look widely for government bond opportunities and within sterling portfolios we

make active use of global bonds (with currency hedging). We

With the recent addition to the team of specialist global high

target multiple sources of outperformance, such as yield curve

yield expertise, we have been able to broaden our range of

positioning, duration management and stock selection, and our

credit strategies. We now offer sterling investment grade, sterling

robust process has enabled us to add value in a wide variety of

ethical bond, Sterling duration hedged, European investment

economic and market situations. Our product range includes

grade, investment grade buy & maintain, bespoke cashflow

funds investing in conventional and index-linked UK and overseas

matching, sterling higher yield and global high yield.

government bonds, as well as bespoke LDI solutions.

A highly experienced team and a strong commitment to In contrast to government bonds, there are greater inefficiencies

service

within the credit market and by considering a wider investment

Our team contains experts in government bonds, investment

universe than many of our peers we can uncover value in many

grade credit and high yield and their collective quality is a key

areas that are often overlooked, including unrated and asset

factor in our success. Each team member averages more than

backed bonds and loans. We avoid over-reliance on credit ratings

14 years’ market experience, giving them the confidence to have

as the main determinant of relative value, instead adopting a

the courage of their convictions and to maintain non-consensus

more forward looking approach to credit analysis. Our analysts

positions where they have strong opinions. We have a deep-

use their extensive corporate knowledge to produce medium

rooted tradition of independent thinking, using our own analysis

term forecasts of how they expect the credit fundamentals of an

to uncover the best investment opportunities. We invest for

issuer to change.

the medium term and believe that our investment horizons are longer than most of our competitors. Collectively, this means

We also examine the potential impact of a deterioration in the

that our focus is on value, rather than market momentum

fundamentals of an issuer and the likely recovery rate in the event

or benchmark weightings. We have a strong commitment

of a default. Our internal rating methodology is designed not just

to meeting our clients’ performance and service objectives.

to determine the probability of default, but also to identify the

Managing assets on behalf of a wide range of clients, we pride

protection offered to our clients through covenants and security.

ourselves on our personalised service, customised to meet each client’s individual needs.

Within both investment grade and high yield credit we are value investors, which in practice means that we place strong

A wide range of funds and investment solutions

emphasis on our own research, preferring companies with sound

We pride ourselves on the depth and quality of the fund range

long term business models and bonds that offer strong covenant

we have developed for our clients. We offer fixed interest

protection and asset backing. We believe that credit ratings

solutions to suit all market conditions either through a

are a lagging indicator. Bond investment is about assessing the

combination of specialist funds or through one of our diversified,

probability of default and the recovery rate and we believe that

aggregate bond funds. Different clients have different investment

inefficiencies arise because too little emphasis is placed on the

needs and we have developed funds to meet a range of risk/

latter. We create highly diversified portfolios, in which holding

return profiles. And with different clients subject to different tax

size is a true reflection of risk, that are designed to be robust

requirements and investment restrictions, we offer both pooled

under a wide variety of scenarios. We believe that this process

pension funds and OEICs. We also offer bespoke, segregated

produces higher and more consistent returns and gives us the

solutions to enable larger clients to meet their specific

greatest opportunity to meet our clients’ objectives.

benchmark and performance requirements.

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Our fund range at a glance Our fixed interest funds fall into one of two categories. Our pooled pension funds are sub-funds of the Royal London Pooled Pensions Company. Established under a life company structure, they are suitable for investment by authorised pension schemes. Our OEICs are sub-funds of Royal London Bond Funds ICVC, with the exception of the Sterling Extra Yield Fund and our Global High Yield Funds which are sub-funds of Royal London Asset Management Bond Funds PLC, registered in Ireland and regulated by the Central Bank of Ireland.

Credit funds UK

Pooled pension funds

OEICs

UK Corporate Bond Fund

Corporate Bond Fund

Benchmark: iBoxx Sterling Non-Gilt All Maturities

Benchmark: iBoxx Sterling Non-Gilt All Maturities

Index

Index

Invests in: predominantly sterling bonds, including

Invests in: broad range of sterling fixed interest

unrated and sub-investment grade bonds

assets

UK Long Corporate Bond Fund

Sterling Credit Fund

Benchmark: iBoxx Sterling Non-Gilt Over 15 Years

Benchmark: iBoxx Sterling Non-Gilt All Maturities

Index

Index

Invests in: long dated sterling credit bonds,

Invests in: a broad range of sterling fixed interest

including unrated bonds, and sub-investment bonds

assets

Over 5 Year Corporate Bond Fund

Ethical Bond Fund

Benchmark: iBoxx Sterling Non-Gilt Over 5 Year

Benchmark: iBoxx Sterling Non-Gilt All Maturities

Index

Index

Invests in: predominantly sterling credit with a

Invests in: predominantly investment grade UK

duration of over 5 years

corporate bonds that meet predefined ethical criteria

Sterling Extra Yield Bond Fund Invests in: broad range of fixed interest securities, including investment grade, sub-investment grade and unrated bonds

Duration Hedged Credit Fund Targets: positive return over the medium term Invests in: predominantly investment grade corporate bonds across a range of maturities; uses derivatives to protect against interest rate risk and targets duration of zero years

Europe

European Corporate Bond Fund Benchmark: Merrill Lynch Corporate & Collateralised Index Invests in: predominantly euro-denominated investment grade credit; may invest in subinvestment grade debt and other securities issued by

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European entities

Pooled pension funds

Credit funds Global (cont.)

OEICs Global High Yield Bond Fund Benchmark: BoAML BB-B Global Non-Financial High Yield Constrained Invests in: predominantly sub-investment grade debt issued by companies domiciled in the UK, Europe, Asia and the United States, across the high yield credit spectrum. The fund may also invest a small portion in investment grade securities.

Short Duration Global High Yield Bond Fund Targets: 3 month LIBOR Invests in: predominantly sub-investment grade debt issued by companies domiciled in the UK, Europe, Asia and the United States, across the high yield credit spectrum. The fund may also invest a small portion in investment grade securities.

Aggregate/ mixed asset funds

UK

Pooled pension funds

OEICs

UK Aggregate Bond Fund

Cash Plus Fund

Benchmark: iBoxx Sterling Overall Index

Invests in: cash, deposits, money market

Invests in: UK government and sterling credit bonds,

instruments, covered bonds, sovereigns,

actively allocating between the two asset classes;

supranationals and short-dated UK government

may also invest in index-linked, overseas and sub-

securities

investment grade bonds

UK Long Aggregate Bond Fund Benchmark: iBoxx Sterling Over 15 Years Overall Index Invests in: long-dated UK government and sterling credit bonds, actively allocating between the two asset classes; may also invest in index-linked, overseas and sub-investment grade bonds

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Our fund range at a glance (cont.)

Government UK bond funds

Pooled pension funds

OEICs

UK Gilt Fund

UK Government Bond Fund

Benchmark: FTSE All Stocks Gilt Index

Benchmark: FTSE All Stocks Gilt Index

Invests in: predominantly UK government bonds of

Invests in: predominantly UK government bonds of

all maturities, based on economic, duration and yield

all maturities ranges, based on economic, duration

curve views

and yield curve views

UK Long Gilt Fund

Index-Linked Fund

Benchmark: FTSE Over 15 Years Gilt Index

Benchmark: FTSE A Index-Linked Gilts All Stocks

Invests in: predominantly long-dated UK

Index

government bonds, based on economic, duration

Invests in: broad range of UK government index-

and yield curve views

linked bonds to offer insulation against moves in inflation

Index-Linked Fund Benchmark: FTSE A Index-Linked Over 5 Years Gilt Index Invests in: broad range of UK government indexlinked bonds to protect against moves in inflation

Enhanced Index-Linked Fund Benchmark: FTSE A Index-Linked Over 5 Years Gilt Index Invests in: predominantly in UK government and corporate index-linked bonds, as well as non-sterling government index-linked bonds sterling government index-linked bonds

Global

Global Bond Fund

International Government Bond Fund

Benchmark: JP Morgan Traded World Government

Benchmark: JP Morgan Traded World ex-UK

Bond Index (Hedged)

Government Bond Index (hedged)

Invests in: government and non-government bonds

Invests in: primarily non-Sterling denominated

across the globe

government bonds, with foreign currency exposure hedged back to Sterling

Global Index-Linked Fund Benchmark: Barclays World Government InflationLinked Bond Index

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Invests in: predominantly global index-linked bonds

Fixed interest product range characteristics

Sterling Extra Yield

Ethical Bonds Buy & Maintain

Global High Yield

Return

Global Govt & Index Linked Gilt / Long Gilt

Corporate / Long Corporate Bond

Cash Plus

Aggregate Bonds

UK Index-Linked Bond Short-Dated Bonds

Risk

The above chart is for illustrative purposes only, cannot be relied upon as a guide to actual investment outcomes and should not be relied upon for the purpose of making investment decisions.

Past performance is not a guide to future performance. The value of investments and the income from them is not guaranteed and may go down as well as up and investors may not get back the amount originally invested.

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You should read the Key Investor Information Documents for OEICs or Key Features document for RLPPC funds available on our website prior to investing.

For further information about any of our products or services, please contact: Royal London Asset Management 55 Gracechurch Street London EC3V 0UF t: 020 7506 6621 f: 020 7506 6796 e: RLAMSalessupport@rlam.co.uk www.rlam.co.uk

Issued by rlam September 2013. Information correct as at that date unless otherwise stated. rlam is a marketing brand which includes the following companies: Royal London Asset Management Limited, authorised and regulated by the Financial Conduct Authority and which provides investment management services, registered in England and Wales number 2244297; Royal London Cash Management Limited, authorised and regulated by the Financial Conduct Authority and which provides investment management services, registered in England and Wales number 963229; Royal London Unit Trust Managers Limited, authorised and regulated by the Financial Conduct Authority and which manages collective investment schemes, registered in England and Wales number 2372439; Royal London Pooled Pension Company Limited, authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and the Prudential Regulation Authority and which provides pension services, registered in Scotland SC048729. All of these companies are subsidiaries of The Royal London Mutual Insurance Society Limited, registered in England and Wales number 99064. Registered Office: 55 Gracechurch Street, London, EC3V 0RL. rlam also includes Royal London Asset Management Bond Funds Plc, authorised and regulated by the Central Bank of Ireland, registered in Ireland number 364259. Registered office: 70 Sir John Rogerson’s Quay, Dublin 2, Ireland.

Our ref: 654-PRO-09/2013-AB.

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Good thinking. Well applied.