Willis Owen Research Commentary
IShares UK Corporate Bond Tracker offers passive exposure to the market of sterling-denominated investment-grade corporate bonds. The fund can work as a core building block for UK investors. The fund does a good job at tracking its benchmark. However, the fund’s performance can be volatile. The non-corporate bond segment of the index can act as a cushion or a drag depending on market conditions, but it also ensures that this passive fund better mirrors how active managers tend to position themselves in this market. The objective is to ensure tight tracking, adding value via the minimisation of trading costs. This is expertly executed in the case of this index fund, as tracking difference (fund return less index return) is routinely below the ongoing charge of 0.16%.
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