Strategic bond funds must invest at least what proportion of assets in sterling-denominated fixed-interest securities?

• A. 60%
• B. 90%
• C. 80%
• D. 100%

Answer: (C)

The key idea here is that a strategic bond fund is expected to be predominantly invested in fixed-interest assets to maintain a bond-focused profile. Requiring at least eighty percent of assets to be in sterling-denominated fixed-interest securities ensures the fund remains anchored in income-generating, fixed-rate exposures issued in pounds, which aligns with investor expectations for a bond strategy.

Having this 80% floor gives enough flexibility to hold up to 20% in other assets—such as non-sterling debt, equities, cash, or hedging instruments—allowing the manager to manage liquidity, currency risk, and risk/return opportunities without drifting away from its core fixed-income mandate. The other options would either dilute the bond focus (60%) or be too restrictive (90% or 100%), so eighty percent is the balanced threshold that defines a strategic bond fund.