Principal launches “unique” monthly income bond fund

Wallet_UKPrincipal Investment Management launched an investment-grade corporate bond fund last week that offers monthly income and targets an annual yield of 5% after fees.

The Principal Monthly Income Investment Grade Bond Fund is designed to take a cautious approach, combining the potential for capital growth with a monthly income.

It invests in both corporate bond and government bond markets, including in emerging markets.

The fund is available in an ISA tax wrapper, making it suitable for UK retail investors, and Principal says the launch makes its fixed income ideas available to a wider range of people.

Due to very specific limitations on the credit quality of the investments the fund can make, it should be among the lowest risk strategic bond funds in the market, the firm says.

Craig Veysey, who runs directly invested fixed income investments at Principal, said: “We think our new fund is unique in the way it combines monthly income provision with investment grade bonds.

Principal manages about £350 million (€420 million) of fixed income in client portfolios.

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