Fund commentary

Market Review
European corporate bonds enjoyed another strong month of positive returns in March ending an excellent quarter for the asset class. The spread over government bonds narrowed yet again. Credit continues to benefit from the impact of the European Central Bank's lending to liquidity strapped banks through its long-term repo operation. Consequently, financial bonds performed strongly.

Fund Performance
The Fund continues to hold core financial names at the expense of peripheral banks. This cost the Fund as peripheral names continued to outperform. Our holding in Repsol was a negative contributor but was offset by the exposure to Telecom Italia.

Fund Positioning
We bought a euro-denominated bond issued by Luxottica, the Italian parent company of a luxury brands group that owns Ray-Ban and Oakley sunglasses. We also participated in a euro-denominated new issue from Heineken, as we were attracted by the defensive qualities of the Dutch drinks group.