Gartmore Corporate Bond Fund benefits from credit default swaps

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Gartmore Corporate Bond Fund benefits from credit default swaps

Retail funds including the Gartmore Corporate Bond Fund are benefiting from the use of Credit Default Swaps (CDS), it has been announced.

In recent months the credit derivatives have been introduced and funds are said to be performing well as a result.

The fixed income team at Gartmore was among the first to use CDS and the company has described the move "as a timely and important addition to our risk-management tool kit".

Gartmore's current "barbell" strategy incorporates the CDS instrument and has so far performed the function of generating alpha for investors in the bonds.

Simon Surtees, who manages the Gartmore Corporate Bond Fund, commented: "This week we've seen a warning from the Bank of England that corporate debt levels are rising in the UK, driven higher by the increase in leveraged buyouts."

"The ability to use instruments such as CDS helps us guard against the negative impact that this trend could have on the market."

Gartmore states that it attempts to keep up with its customers' demands by taking alternative approaches to investment strategies.

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