Fund commentary

Market Review
Corporate bonds moved lower in April. Financials were the biggest fallers. While sterling bonds underperformed euro-denominated bonds, the beneficial effect of the European Central Bank's long-term refinancing operation on the latter appeared to be waning. Higher-yielding credit was largely unchanged. Ten-year Gilt yields were lower.

Fund Performance
The Fund's fairly cautious current approach benefited performance over the month. Exposure to the financial sector has been meaningfully reduced over recent months and cash balances and Gilt holdings increased. Short positions in Spain, and via the iTRaxx Crossover and sub-financial indices continued to benefit the Fund as spreads widened.

Fund Positioning
We participated in a new issue from G4S, the security services company, and purchased a Lower Tier 2 bond from ING. We reduced our holding in BT, and reduced insurance exposure through selling Aviva. We also purchased a called bond from Allianz.