The aim of the new KBL EPB Fund - Corporate Bonds Euro sub-fund is twofold: firstly, to take advantage of the current high corporate bond rates and, secondly, to ensure that you benefit from the increase in bond prices expected to accompany the first signs of renewed confidence in the economy.

The Fund aims to exploit opportunities in the euro-denominated corporate bond market by following a very strict selection process. This guarantees you both the benefits of a professional management structure and a level of diversification designed to mitigate the impact of individual issuer defaults.

Source: Bloomberg – Reference period: 15/02/1999 to 15/02/2009 – The data reflected in the graph above relate to past years. Past performance is not a reliable indicator of future results.

For further information and help in assessing whether this product suits your personal investor profile, please contact your financial adviser.

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The funds promoted by KBL European Private Bankers S.A. are officially open for subscription and permitted to make public offerings in those countries in which they are authorised for sale. This sales authorisation does not necessarily mean that each sub-fund is open for subscription as individual registration is necessary in each case. The KBL EPB Fund - Corporate Bonds Euro is registered in Luxembourg and will soon be registered in Switzerland, Belgium, France, Netherlands and Germany. The attention of investors is drawn to the fact that past performance is not a guarantee of future results. Any subscription should be made on the basis of the prospectus taken together with the latest annual report and the latest half-yearly report (where this is more recent than the latest annual report). These documents are available from the Fund’s registered office and from the branches, subsidiaries and accredited distributors of KBL European Private Bankers S.A. They may also be consulted via our website at www.kbl.lu.

Why invest in the corporate bond market today?

The financial markets are currently experiencing an unprecedented crisis of both liquidity and confidence. In this environment levels of risk aversion have increased considerably and investors are turning towards products offering the least possible risk: these include both money-market instruments and government bonds.

For businesses looking to raise finance in the markets, this move towards what are considered to be safe assets has meant paying ever higher risk premiums. As a result, rate spreads between corporate and government bonds have reached levels rarely seen before.

In addition, corporate bonds are also regarded as offering good value since their rates take into account what is currently considered to be a high default risk. In time, however, as the economic climate improves, the corporate bond market might well benefit more from the tightening of spreads than government bonds. Currently offering significantly higher yields than government bonds in order to attract investors and to reward additional risk-taking, corporate bond rates may well rise as the likelihood of defaults falls.

Source: Bloomberg – Reference period: 15/02/1999 to 15/02/2009 – The data reflected in the graph above relate to past years. Past performance is not a reliable indicator of future results.

A rigorous selection process

Independently selecting corporate bonds, monitoring the associated risk and achieving satisfactory diversification within a portfolio is no easy matter for the individual investor. Placing your assets in the KBL EPB Fund - Corporate Bonds Euro guarantees you professional management and risk monitoring, thereby allowing you to capitalise on opportunities arising in the market whilst simultaneously limiting risk-taking.

Within its benchmark universe, IBoxx Euro Corporates, the KBL EPB Fund - Corporate Bonds Euro focuses on issuers in the investment-grade sector, i.e. those with major agency ratings higher than or equal to Standard & Poor’s BBB or Moody’s Baa3, and on bonds with limited residual maturity.

In choosing amongst the bonds which fulfil these criteria, the manager applies a selection filter based on a number of variables which reflect the financial health of a business in order to build up a portfolio of some 40 to 50 bonds diversified by sector. In addition, the weighting of each position is limited in order to avoid the concentration of individual risks.Finally, the manager uses a risk monitoring tool designed to detect any deterioration in a position. An issuer which ceases to satisfy the selection criteria is withdrawn from the portfolio immediately.