Alliance Trust's new bond aims for £100m

Alliance Trust's fixed income team, which defected from rival Scottish Widows Investment Partnership (Swip) last year, has raised £35 million from private investors and brokers for its new bond fund and aims to hit £100m next year.

The Dundee-based trust, which has some 2.3 billion of assets under management, launched its first ever bond fund aimed at producing income for investors in June.

Rod Davidson, the head of fixed income at Alliance Trust, said corporate bonds would continue to provide returns.

"Higher rated corporate bonds still offer value, especially given the emergence of the global economy from recession," he said.

He added that he expected more companies in the UK and Europe would follow the lead of US firms and increasingly tap corporate bond markets - particularly where lenders have reduced their balance sheets, which provides more opportunity for investors.

"Good companies that have previously chosen to use banks have to use corporate bond markets for finance, that is helpful," Davidson said. "There is a bigger market for private placement."

The fund is co-managed by Gareth Quantrill and Stuart Steven, along with Stuart McMaster, who is responsible for asset allocation.

The team left Lloyds Banking Group-owned Swip last August. They admit that when they departed, the firm was in flux after the bank sold its former HBOS-owned asset manager Insight.