The most significant feature of the Monument fund is its portfolio being 100% invested in asset backed securities which fall under the broader category of “floating rate” bonds. This means they do not fall in value like traditional bonds when interest rates rise. Instead, they deliver a higher yield.
The fund focuses on the higher quality end of the ABS market, investing in a combination of residential and commercial mortgages together with portfolios of consumer and more general loans. The underlying borrowers all reside in the UK, Europe or Australia.
We like the fund as it offers an attractive yield with very low duration, thereby potentially protecting capital well in falling bond markets.