Reaching new heights: the £1bn milestone

Steve Matthews gives an overview of his investment process:

“We’ve grown this fund steadily since launch through following the same replicable five-stage investment process that we have used since we started the fund with £140m in 2017, and we intend to keep doing so as the fund continues to grow.

For us, creating value comes through identifying opportunities in the market that suit the specific needs and process of the fund, by identifying price changes and anomalies. We determine how best to deploy these for the make-up of the portfolio by considering factors such as ratings, exposure to certain assets and liquidity provision.

We hope that reaching the £1bn mark will give all potential investors added reassurance that we can accommodate any liquidity requirements.”

Case study: our fund construction process in practice

Money markets normally go quiet at the end of the year as traders take an extended break. However, at the end of 2024 markets were highly liquid and there has been an abundance of secondary commercial paper (CP) and certificates of deposit (CD) on offer at 10-15bps spreads over SONIA (which currently stands at 4.70%).

We have maintained an overweight in overnight deposits (Stage 1) throughout 2024, but have recently trimmed this position to take advantage of the above situation, for example by adding the above January 2025 CP (Stage 5) at a yield of 4.80%.

Elsewhere in the market, we constantly look for value in 13-month bonds (Stage 2) and have recently purchased £2m Banque Federative du Credit Mutuel 5 01/19/26 at 5.11% to provide a long-term yield above the expected trajectory of rates. We also added floating rate notes (FRNs) (Stage 4) in the supra, sovereign & agency (SSA) and covered bond spaces in a couple of ‘win-win’ trades in terms of sector and spread available.

Stage 3 trades involve close monitoring of the market and – on occasion – can add significant value. For example, we have just purchased £10m European Investment Bank 5 ½ 04/15/25 at 5.04% (34bps above SONIA) to improve liquidity, diversification and average rating, as well as yield. This comes on top of the £4.7m Development Bank of Japan 1 ¼ 01/31/25 that we were also able to buy at 5.20%. Comparable UK treasury bills were yielding just 4.63%.

James Stoddart, Head of Distribution

“We are delighted that our WS Canlife Sterling Liquidity Fund has surpassed £1bn in assets under management. The fund was launched in 2017 to appeal to institutions, charities, universities and housing associations who were looking for an enhanced return relative to short-term bank deposits. A number of these clients are now invested and we are similarly thrilled that a wide range of discretionary fund managers and financial advisers have also utilised the fund, all of whom are co-invested alongside a number of internal group entities.”

Important information

The value of investments may fall as well as rise and investors may not get back the amount invested.

This fund is a UCITS scheme and a standard variable net asset value (VNAV) money market fund (MMF). The MMF is not a guaranteed investment, nor does it receive external support to guarantee its liquidity. Unlike bank deposits, investment in MMFs can fluctuate and investors’ capital is at risk.

The views expressed in this document are those of the fund manager at the time of publication and should not be taken as advice, a forecast or a recommendation to buy or sell securities. These views are subject to change at any time without notice.

This page is for information only. It does not constitute a direct offer to anyone, or a solicitation by anyone, to subscribe for shares or buy units in fund(s). Subscription for shares and buying units in the funds must only be made on the basis of the latest Prospectus and the Key Investor Information Document (KIID) available in the Literature section for each fund.