Smith & Williamson AAA-rated duo: the perfect fund for these times?

Some could say that Chris Lynas and Ian Kenny perhaps launched the perfect fund at the perfect time.

The Smith & Williamson Short-Dated Corporate Bond fund launched at the height of the credit crunch in April 2009 and its process is simple.

The low risk fund invests in sterling, US dollar and euro investment grade corporate bonds with the freedom to invest across all sectors and geographical regions. The bonds purchased have no more than six years to maturity and are usually sold with 18 months to maturity to realise income and some capital appreciation.  

In theory this approach makes the fund less risky than funds investing in longer term bonds, which are more susceptible to rises in interest rates, especially with rates currently sitting on historic lows.

This process has delivered the goods and Lynas and Kenny, who also run the S&W Fixed Interest Trust, recently won their first AAA-rating from Citywire.

However, as demand for risk assets grows as the eurozone crisis appears to be easing, we ask Lynas and Kenny if their fund, which has drawn in millions in the uncertainty, is in danger of being left behind.

Also, what happens if we get a leftfield event - for example the Bank of England unexpectedly raises interest rates?