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Fund of the year managed by Landsvaki - Government Bond Fund Indexed achieved 16.3% rate of return in 2011
A Landsvaki bond fund, Government Bond Fund Indexed (Sparibréf verðtryggð), achieved the highest returns of UCITS and investment funds in Iceland last year, according to impartial comparison by websites keldan.is and sjodir.is. Government Bond Fund Indexed invests in medium and long indexed government-backed Icelandic bonds. The fund achieved a 16.3% rate of return, a specially admirable performance considering current conditions in the economy. Returns on bond funds was generally good in 2011.
Landsvaki offers its customers a wide selection of government bond funds with various durations. The shortest funds, such as Government Bond Fund Ultra-short Duration, involves little interest rate risk and thus negligible fluctuatations in returns. Longer funds, such as the Government Bond Fund Indexed, involve more interest rate risk and a higher risk of volatility in returns while long-term returns are generally higher. There is also a choice between government bond funds investing solely in indexed or non-indexed securities and mixed government bond funds investing in both.
Landsvaki emphasises offering funds suited to the needs of the market at each time. Two new funds were established towards the end of 2011, both sold by Landsbankinn:
Asset Allocation Fund (Eignabréf) is an investment fund that invests in a diversified portfolio of securities based on a core of government-backed securities. The Asset Allocation Fund is authorised to invest in the unit shares of funds investing in securities that comply with the fund's investment strategy. The Asset Allocation Fund is suitable for the long-term savings of individuals willing to invest in higher-risk assets. Short-term fluctuations in returns are to be expected while expected long-term returns should be higher than in government bond funds.
Veltubréf is a UCITS fund that invests primarily in deposits and treasury bills; however, the fund is also authorised to invest in money-market instruments issued by municipalities, banks and other companies. Veltubréf is short-term, relatively low-risk fund with regard for interest rate risk yet a higher-risk investment strategy with regard for the fund's counterparty risk. As there is little fluctuation in returns, the fund is suitable for short-term savings.
Investors in funds should keep in mind that past performance is not necessarily an indication of future return and that the price of units can both increase and decrease.
Further information about Landsvaki funds is available on Landsvaki's website as well as on the website of Landsbankinn.
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