In 2013 the fund returned 8.41% which compares very favourably to its benchmark's return of 5.18% and to its target of the benchmark's return multiplied by 1.10. Latest available data show it also to be in the top decile among its 57 peers over the year.

The primary sources of outperformance were the continual exploitation of the steepness in the short end of the yield curve, successful selection of an array of floating rate notes, occasional forays into the longer end of the curve and the avoidance of tempting, but expensive preference shares.

We retain our view that value in long bonds does not yet warrant an income fund venturing into those. However, value has begun to improve and we are monitoring the situation closely. We expect to participate in some exciting new floating rate issues in January 2014. We have pre-analysed these, and barring unexpected developments, they should suit the fund well.