Artemis Short-Duration Strategic Bond Fund

To generate a return that exceeds the Markit iBoxx 1-5 year £ Collateralised & Corporates Index, after fees, over rolling three-year periods, through a combination of income and capital growth, by investing in a portfolio of global debt and debt-related securities whilst maintaining an aggregate portfolio duration of below 4 years (duration is a measure of the sensitivity of the prices of bonds to changes in interest rates).

There is no guarantee that the fund will achieve a positive return over a three-year period or any other time period and your capital is at risk.

• The fund is actively managed.
• A combination of two strategies is used:
  • Credit strategy: aims to generate returns through the manager’s highest-conviction ideas on credit assets which are expected to rise or fall in value over a particular period. These ideas may be implemented through trades which are intended to exploit the relative prospects of two assets or indices, for example by taking a long position in one and a short position in the other.
  • Rates strategy: aims to exploit expected movements in inflation rates, interest rates globally and the value of global government bonds. The manager seeks to generate returns by using derivatives to take long and short positions in global government bonds, inflation rates or interest rates.

• By strategically allocating between different types of bonds as the economic cycle turns and as market conditions change, the manager aims to preserve capital in difficult times and to profit when conditions improve.

What the fund invests in

• At least 80% in debt and debt-related securities, directly or indirectly using derivatives, including:
  • Corporate bonds (investment grade and non-investment grade)
  • Government bonds, including agency bonds and supranational bonds,
  • Securitisations and collateralised debt, such as asset-backed securities and mortgage-backed securities
  • Other securities, such as floating rate bonds, emerging market debt, convertible bonds (including contingent convertible bonds) and preferred securities would be used where the manager considers these to be attractive or necessary in light of the market conditions.
• The fund may also invest in cash and near cash, other transferable securities, other funds (up to 10%) managed by Artemis and third party funds, and money market instruments.

Use of derivatives

The fund may use derivatives such as futures, forwards, swaps and options:

• for investment purposes to achieve the fund objective, including taking long and short positions in sovereign bonds, credit spreads (via credit default swaps on single issuers or indices), interest rates or inflation expectations
• to produce additional income or growth
• for efficient portfolio management purposes to reduce risk and manage the fund efficiently.

Where the fund invests

• Globally.
• No more than 40% net exposure (longs minus shorts) in emerging market debt securities.
• At least 90% of the fund will be denominated in or hedged back to sterling.

Industries the fund invests in

• Any

Credit quality of bonds the fund invests in

• Investment grade, being:
  • BBB- or above by Standard & Poor’s; or
  • BBB- or above by Fitch; or
  • Baa3 or above by Moody’s
• No more than 40% net exposure (longs minus shorts) in below investment grade securities.
• Up to 10% in unrated bonds.
• The fund will not purchase bonds below B3 by Moody’s, B- by S&P or B- by Fitch (the Minimum Bond Rating). Bonds downgraded after initial investment may continue to be held at the manager's discretion. Where the fund has exposure to an index the Minimum Bond Rating will apply to the average credit rating of bonds making up the index.

Other limitations specific to this fund

• The fund’s portfolio duration will vary between -2 years and +4 years.
• No more than 40% net exposure (longs minus shorts) in aggregate in a combination of emerging market debt securities and below investment grade securities. In this context, emerging market countries means countries included in the MSCI Emerging Markets Index and those included in the World Bank definition of developing economies or those countries which are, in the manager’s opinion, developing countries.

iBoxx £ Collateralized & Corporates 1-5 year Index

An indicator of the performance of short-dated sterling denominated corporate investment grade bonds, in which the fund invests. It acts as a ‘target benchmark’ that the fund aims to outperform. Management of the fund is not restricted by this benchmark. While the fund has the flexibility to strategically invest across fixed income sectors, sterling denominated investment grade corporate bonds are likely to be the main asset class in the portfolio, and the manager believes this index is the closest proxy for the long-term asset allocation of the fund.