Royal London European Sustainable Credit Fund

The RL European Sustainable Credit Fund mainly invests in euro-denominated investment grade corporate bonds. It focuses on bonds deemed to make a positive contribution to society, so the portfolio is built around companies and issuers with sustainable characteristics. Because it is a bond fund, it is generally expected to be less volatile than equities.

The RL European Sustainable Credit Fund is actively managed by RLAM, which means the manager makes selection decisions rather than simply tracking an index. It seeks returns through a mix of capital growth and income from its bond holdings. The fund is compared against the ICE BofAML Euro Corporate & Pfandbrief Total Return EUR Index, but its holdings can differ materially from that benchmark.

The RL European Sustainable Credit Fund has exposure across sectors such as banks and financial services, utilities, insurance, real estate, telecommunications, consumer services, general industrials and consumer goods. Its top holdings include names such as Hannover Rueck, Alliander, NatWest Group, Allianz and ABN AMRO. This shows the fund is diversified across a range of European corporate issuers rather than concentrated in one industry.

The RL European Sustainable Credit Fund is designed for investors seeking income and some capital growth from a bond portfolio, with lower day-to-day volatility than shares. It is described as suitable for a medium-term investment horizon of 3 to 5 years, although the broader Royal London guidance suggests investing over at least 7 years to reduce short-term volatility. Investors should be comfortable with the risks of bond markets and sustainability screening.

The RL European Sustainable Credit Fund carries market fluctuation risk, capital risk, currency risk, counterparty risk, liquidity risk and sustainability risk. Currency risk means changes in exchange rates can affect returns if the fund holds assets or cash flows linked to other currencies. Counterparty risk means a deal partner may fail to meet its obligations, while liquidity risk means some holdings may be harder to buy or sell quickly at a fair price.