Changes to investment policy of Artemis Target Return Bond Fund

Last updated 19 October 2020

We amended the “Other limitations specific to this Sub-Fund” section of the investment policy of Artemis Target Return Bond Fund (the “Fund”).

The Fund was previously limited to:

(i) a maximum of 3% exposure to any non-government issuer of investment grade securities, and
(ii) a maximum of 2% exposure to an individual issuer of below investment grade securities or an issuer listed, headquartered or having significant business in emerging markets.

These limits were increased to:

(i) 5% for any non-government issuer of investment grade securities; and
(ii) 3% for an individual issuer of below investment grade securities or an issuer listed, headquartered or having significant business in emerging markets.

All of the other limits in the investment policy were unchanged.

Why did Artemis make these changes?

The changes are intended to provide the managers with wider scope to reflect more effectively their individual and collective views on the underlying opportunities in their chosen markets and allow the managers to put greater emphasis on directional exposure (i.e. unhedged exposure to market movements) and allow them greater scope to invest in individual investment grade and high yield issuers.

While we anticipated that these changes will increase the level of risk within the portfolio, our overall conclusion was that the level of risk in the Fund is commensurate with the stated return target and an increased market directional exposure. It was not expected that the Synthetic Risk and Return Indicator of any share class of the Fund would change from the previous position (3 out of 7). 

We believe that, particularly in the environment at the time the changes were proposed, these changes will enhance the managers’ ability to manage the Fund optimally and deliver on its stated return target (to achieve a positive return of at least 2.5% above the Bank of England base rate, after fees, on an annualised basis over rolling three-year periods.)  Even with the introduction of these changes there is, of course, no guarantee that the Fund will achieve a positive return over a rolling three-year period or any time period; and your capital is at risk. 

The changes came into effect on 19 October 2020.

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