The fund aims to provide a combination of capital growth and income that is consistent with or higher than European inflation (as measured by Eurostat Eurozone Harmonised Index of Consumer Prices) over any three-year period.
Investment policy and strategy
Core investment: At least 50% of the fund is invested in high quality inflation-linked bonds issued by companies. The fund invests directly or indirectly in inflation-linked bonds by combining inflation-linked government bonds with derivatives. A minimum of 90% of the fund is in euro or hedged back to euro.
Other investments: The fund may invest in other funds and cash or assets that can be turned into cash quickly.
Derivatives: The fund may also use derivatives to reduce the risks and costs of managing the fund.
Strategy in brief: The fund is designed to provide protection from the negative effects of inflation by being positioned with a low sensitivity to movements in interest rates.
Spreading investments across issuers and countries is also an essential element of the fund’s strategy.
Benchmark: Eurostat Eurozone Harmonised Index of Consumer Prices
The benchmark is a comparator against which the fund’s performance can be measured. The index has been chosen as the fund’s benchmark as it best reflects the scope of the fund’s investment policy. The benchmark is used solely to measure the fund’s performance and does not constrain the fund's portfolio construction.
The fund is actively managed.The investment manager has complete freedom in choosing which investments to buy, hold and sell in the fund.
For unhedged and currency hedged share classes, the benchmark is shown in the share class currency.
You can find more information about the objective and investment policy of the fund in the Prospectus.
Risks associated with the fund
The value and income from the fund's assets will go down as well as up. This will cause the value of your investment to fall as well as rise. There is no guarantee that the fund will achieve its objective and you may get back less than you originally invested.
Investments in bonds are affected by interest rates, inflation and credit ratings. It is possible that bond issuers will not pay interest or return the capital. All of these events can reduce the value of bonds held by the fund.
The fund may use derivatives to profit from an expected rise or fall in the value of an asset. Should the asset's value vary in an unexpected way, the fund may lose as much as or more than the amount invested.
The fund is exposed to different currencies. Derivatives are used to minimise, but may not always eliminate, the impact of movements in currency exchange rates.
For accumulation shares, if inflation is low or zero, there is a risk that the fund’s expenses exceed the income it earns. If this happens, any shortfall will be taken from the fund’s capital and the fund's capital growth will be reduced.
This fund is subject to effective yield accounting. As a result, part of its capital inflation protection will be distributed to holders of income shares. Income shareholders will therefore, in effect, be receiving part of the capital protection as income.
The hedging process seeks to minimise, but cannot eliminate, the effect of movements in exchange rates on the performance of the hedged share class. Hedging also limits the ability to gain from favourable movements in exchange rates.
In exceptional circumstances where assets cannot be fairly valued, or have to be sold at a large discount to raise cash, we may temporarily suspend the fund in the best interest of all investors.
The fund could lose money if a counterparty with which it does business becomes unwilling or unable to repay money owed to the fund.
Further details of the risks that apply to the fund can be found in the fund's Prospectus.
The Fund allows for the extensive use of derivatives. The fund may invest more than 35% in securities issued by any one or more of the governments listed in the fund prospectus. Such exposure may be combined with the use of derivatives in pursuit of the fund objective. It is currently envisaged that the fund’s exposure to such securities may exceed 35% in the German government, although this may vary subject only to those listed in the prospectus.