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A disaster brewing for bonds?
FILM: Inflation storm
BADLY BEHAVING BONDS
Fund managers battle to take control
Bond markets work towards a greener future
Content from: Aegon
There are dark clouds forming over the 40-year bond bull market as the inflation threat grows. Where are fund managers and selectors finding shelters and opportunities in this challenging climate?
Where the smart money is going
UNDERCOVER FUND SELECTOR
by John Schaffer
It has been a rocky start to the year for fixed income as the spectre of inflation rears its ugly head. But do these inflation expectations translate to doom and gloom for bond investors? Yields on US and UK government bonds have shot up since the start of the year, despite Federal Reserve chair Jay Powell’s best attempts to assuage nerves. In this video, top bond fund managers and wealth managers assess what the inflation consequences could be for bonds and how the risk can be hedged.
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In this low interest rate environment, demand for private debt has soared. Alternatives data provider Preqin anticipates assets in this relatively niche fixed income market will rise by around 11.4% at a compound annual growth rate to $1.46tn (£1.05tn) over the next five years. We speak to Saranac head of private capital Robert Crowter-Jones on how to exploit this phenomenon, assessing whether it can help investors meet income needs while managing the default risk. But does the return potential of private debt justify the high investment costs associated with this asset class?
by Selin Bucak
Allianz Global Investors Aegon Asset Management
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For professional investors only. Past performance is not a reliable indicator of future results. Investing involves risk. The value of an investment and the income from it may fall as well as rise and investors might not get back the full amount invested. Allianz Strategic Bond Fund is a sub-fund of Allianz UK & European Investment Funds, an open-ended investment company with variable capital with limited liability organised under the laws of England and Wales. The views and opinions expressed herein, which are subject to change without notice, are those of the issuer companies at the time of publication. This is a marketing communication issued by Allianz Global Investors GmbH, www.allianzgi.com, an investment company with limited liability, incorporated in Germany, with its registered office at Bockenheimer Landstrasse 42-44, 60323 Frankfurt/M, registered with the local court Frankfurt/M under HRB 9340, authorised by BaFin (www.bafin.de). Allianz Global Investors GmbH has established a branch in the United Kingdom, Allianz Global Investors GmbH, UK branch, 199 Bishopsgate, London, EC2M 3TY, www.allianzglobalinvestors.co.uk, deemed authorised and regulated by the Financial Conduct Authority. Details of the Temporary Permissions Regime, which allows EEA-based firms to operate in the UK for a limited period while seeking full authorisation, are available on the Financial Conduct Authority’s website (www.fca.org.uk). Details about the extent of our regulation by the Financial Conduct Authority are available from us on request. AdMaster: 1536378.
Risk premia tend to move together as evidenced by the high correlation of equity volatility and credit spreads. A portfolio that is always long of corporate bonds behaves like the equity portion in your multi-asset portfolio, adding risk rather than diversifying in periods where equity prices fall. Back in 2016, we designed the Allianz Strategic Bond Fund to be fundamentally different to most peers, which are structurally long credit. We want the fund to serve as a true diversifier in a multi-asset or a credit-heavy fixed income portfolio. We therefore explicitly target zero correlation with equities, which the fund has achieved – the correlation with the MSCI World equity index has been 0.06 since inception of the strategy. [1] It is important to emphasize that our correlation target with equities is over the medium term but not at all points in time. Flexibility is key as we do not want to have any structural active biases within the portfolio to any particular fixed income area. We tend to own risky assets when valuations are attractive, i.e. the market is fearful and risk premia are high, and we would rather not own credit, or can even be net short, when the market is greedy and risk premia are low. 2020 was a case in point where credit as an asset class was the most mis-priced relative to our convictions – in both directions. Credit spreads were far too expensive going into the Covid crisis, but then after markets blew up, credit became far too cheap coming out of the crisis. When markets were peak-panicking we rapidly turned the portfolio around from a net short position to a large overweight in credit. That said, it wasn’t just credit that drove returns in 2020 – both our correlation and our asymmetry targets enforce discipline on us to never be entirely risk-on (or risk-off) in every part of our portfolio, and we always implement various uncorrelated positions and (macro) hedges.
The fund aims to have zero correlation to equities – how successful have you been at achieving this and why?
Mike Riddell is Head of Macro Unconstrained at Allianz Global Investors
Q&A with Mike Riddell
CONTENT BY
Why AllianzGI designed its Strategic Bond Fund to be fundamentally different from its peers.
Asymmetry is important to you. How do you build this into the portfolio?
While the returns of the strategy have been strong, we’re just as pleased that we’ve limited the maximum drawdown relative to benchmark to less than 3% since we launched the fund. Asymmetry is central to this – we aim to generate larger positive alpha when our views are correct, while minimising the extent of any drawdowns when we get things wrong. To achieve this, we search to express views across rates, credit/spread, inflation and FX where there is limited downside but significant upside. Generally, if an asset is already at extreme expensive levels relative to its history, it requires a significant event, or a regime change, to become even more expensive, but it can fall sharply. Meanwhile, if an asset is already cheap, then the asymmetry is much more in your favour. Finally, running stress tests and scenario tests are a crucial part of the risk management process, to provide validation to the portfolio managers that the fund delivers the desired asymmetry across a range of different outcomes, including those we don’t expect.
How are wealth managers using the fund?
Wealth managers use our fund as a strategic fixed income building block which is supposed to behave like the right type of global bond fund at a given time. They also use it to provide diversification benefits to their equity and high yield allocation.
As bond fund managers, how important is it to be unconstrained today relative to history?
Historically low yields, or in some case even negative yields, means that the total return expectations of fixed income are greatly limited relative to history. For passive or constrained fixed income investment approaches, the low yields on offer means there’s a lower or even negative return expectation. But the good news is that for actively managed unconstrained bond portfolios in particular, yield is a very poor predictor of performance. The wider the degrees of freedom and the flexibility, the more active return can be generated from market moves in either direction – not being dependent on income, carry and yield/spread compression as sources for performance. Last year was a great stress test for strategic bond funds to demonstrate their flexibility and philosophy. Last year offered all necessary ingredients for an active unconstrained bond fund manager to generate alpha. We had high conviction views, there was significant mispricing, which was followed by large market moves.
What, in your view, are the best opportunities in bond markets at present? What is the outlook for the economy and how does this translate into your positioning?
The global reflation narrative remains intact, where for example the current strength of global growth can be seen in industrial commodity prices trading at the highest levels since 2012. While being bearish government bonds is not the no-brainer that it was last summer simply on valuations, we maintain our duration underweight moving some of our short rate duration positions towards the front end of the curve which has barely moved. We remain concerned that the big inflation numbers that are coming in Q2 could be the catalyst for another leg higher in sovereign bond yields, when we’ll see temporary inflation jumps due to base effects. Credit markets are pricing in an incredibly benign economic scenario, with spreads close to pre-crisis levels. We feel they are not offering protection against spread widening, let alone defaults. Emerging markets, as well as some developed market commodity exporters, stand out as fundamentally cheap. These areas could continue to benefit from increased demand from Asia and the improving global outlook. As a result, we are positioned neutral on a directional risk basis, so as the portfolio as it currently is positioned should once again be uncorrelated to equities. We do, however, have some larger relative value trades, where for example we are bearish of developed market corporate bonds, but against this, bullish on EM currencies and EM local currency government bonds. If a further pronounced global rates selloff does materialise in the coming months, then it’s likely we’d start building into longer positions, given we expect the reflation narrative to take a dent over the summer as year-on-year inflation rates are set to fall sharply, as China slows, and as higher commodity prices start becoming a global growth headwind.
We want the fund to serve as a true diversifier in a multi-asset or a credit-heavy fixed income portfolio
Source: Allianz Strategic Bond Fund C (Inc) GBP; Bloomberg, as at: 31/01/2021. Strategy inception date: 21/06/2016. Past performance is not a reliable indicator of future results.
When it comes to the most popular fixed income strategies among UK fund selectors, it seems the one thing they share in common are investment styles that set themselves apart. For example, Rathbones’ Ethical Bond fund is beloved for its rigorous yet flexible approach to socially responsible investment, while the five strategic bond funds shown below all rely on the reputation of their teams in managing a broad range of fixed income securities.
‘When selecting fixed income funds for our multi-asset portfolios, we look for managers with a proven track record of adding value and managing both credit and interest rate risks well. Given the current limitations of ESG credit analysis, we also place a great emphasis on how fund groups actively manage and integrate ESG into their credit selection. ‘Tilney’s Sustainable Portfolios invest in a handful of core funds that meet our investment criteria. These include TwentyFour Sustainable Short Term Bond Income, which is managed by Chris Bowie using the firm’s Observatory database. Tilney was a seed investor in the new fund. ‘The Rathbone Ethical Bond fund has also featured in our portfolios for a number of years now. Manager Bryn Jones has a long and successful track record of managing the fund, with the investment process incorporating his ‘four Cs plus’ approach to credit analysis and both positive and negative ESG screening.’
Louie French, sustainable portfolio manager, Tilney
‘We like the Allianz Strategic Bond fund because it has an explicit objective to be uncorrelated with equity markets, which provides diversification benefits across our multi-asset portfolios. Many strategic bond funds are structurally biased towards corporate and high-yield bonds – these are more sensitive to the economic environment and, as such, are likely to be more related to equities, potentially reducing the benefit at a portfolio level. ‘More generally for fixed income funds, we feel it is important to focus on the opportunity set for managers to add value and also to think about the levers they have at their disposal. For example, within high yield or emerging market bonds, we would tend to favour nimble asset managers who have the ability to take advantage of a less well-researched market and can hopefully profit from superior information flow and analysis.’
Ian Jensen-Humphreys, portfolio manager, Quilter Investors
by Robin Amos
T. Bailey Greystone Wealth Management Equity Trustees 8AM Global Castlefield
Rathbone Ethical Bond Fund
Janus Henderson Strategic Bond Fund
Waverton Margetts Fund Management Quilter Investors BMO Asset Management Vestra Wealth
PIMCO GIS Global Investment Grd Crdt Fd
T. Bailey Aberdeen Standard Investments Hargreaves Lansdown Jupiter Investment Fund Services
Jupiter Strategic Bond Fund
Smith & Williamson Margetts Fund Management Valu-Trac Investment Management Brompton Asset Management Albert E Sharp
Artemis Strategic Bond Fund
UBS (Lux) EEF Global Bonds (USD)
UBS Asset Management
Royal London Sterling Credit Fund
Brooks Macdonald Funds; Quilter Cheviot Investment Management; Margetts Fund Management; Aberdeen Standard Investments; Investment Fund Services
Legal & General Investment Management; BMO Asset Management; Host Capital; Seven Investment; Management Janus Henderson
TwentyFour AM Dynamic Bond Fund
Aberdeen Standard Investments Omnis BMO Asset Management Tilney Investment Fund Services
TwentyFour Corporate Bond Fund
Allianz Strategic Bond Fund
Cornelian Asset Managers Hawksmoor Investment Management Greystone Wealth Management Quilter Investors Quilter Cheviot Investment Management
Quilter Cheviot Investment Management Heartwood Wealth Management Cornelian Asset Managers Aberdeen Standard Investments Omnis
Legal & General Investment Management; BMO Asset Management; Host Capital; Seven Investment Management; Janus Henderson
VEHICLE
FIRM
Most held fixed income funds
Louie French is a sustainable portfolio manager at Tilney
Ian Jensen-Humphreys is a portfolio manager at Quilter Investors
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For Professional Clients only. Capital at risk. Opinions and/or example trades/securities are used to promote Aegon Asset Management's investment management capabilities: they are not investment recommendations, research or advice. This marketing is not prepared in accordance with legal requirements designed to promote the independence of investment research, and is not subject to any prohibition on dealing by Aegon Asset Management or its employees ahead of its publication. Data attributed to a third party (“3rd Party Data”) is proprietary to that third party and/or other suppliers (the “Data Owner”) and is used by Aegon Asset Management UK plc under licence. 3rd Party Data: (i) may not be copied or distributed; and (ii) is not warranted to be accurate, complete or timely. None of the Data Owner, Aegon Asset Management UK plc or any other person connected to, or from whom Aegon Asset Management UK plc sources, 3rd Party Data is liable for any losses or liabilities arising from use of 3rd Party Data. Aegon Asset Management UK plc is authorised and regulated by the Financial Conduct Authority.
The ‘ESG-labelled’ bond market has grown exponentially in recent years. Issuance has responded to increasing investor demand driven by shifting public perception and regulatory change. With climate risk now at the forefront of current ESG concerns it is perhaps not surprising that Green bonds have dominated the growth in the labelled market. As more and more money pours into ESG or sustainability-linked portfolios, companies have been able to issue ESG-labelled bonds at a premium, or “greenium”, relative to their conventional bonds, which in turn has encouraged further issuance.
Rory Sandilands is an Investment manager
By Rory Sandilands
As more and more money pours into ESG or sustainability-linked portfolios, companies have been able to issue ESG-labelled bonds at a premium, or 'greenium'
Source: Bloomberg
Source: Morningstar Direct. Manager Research. Data as of December 2020.
However, such rapid growth in a relatively immature sector, a lack of standardised definitions and inconsistency in reporting metrics inevitably leads to a blurring of interpretation as to what constitutes an ESG or sustainable fund on the one side and an appropriate investment on the other. Concerns about “greenwashing” are real. (Green bonds: Peeling back the label (aegonam.com) Issuance of sustainability-linked debt has been more modest to-date but is now becoming more prevalent and offers potential advantages both in terms of simplicity and ultimately, in terms of environmental impact. Issuers such as United Utilities and Tesco made their sustainability-linked debt debuts in January this year. While green bonds tend to be connected to funding specific projects or expenditures that are reported on separately, sustainability-linked bonds do not restrict the use of proceeds but instead impose financial penalties, such as increased coupons, when the company fails to meet key environmental performance targets. Green bond issuance does not, for example, prevent a company from otherwise increasing its carbon emissions at the corporate level, so long as the specific project for which the bond was issued meets its targets. By linking the entire corporate strategy of a company to environmental targets, sustainability-linked issuance not only makes it is easier for investors to monitor compliance, but also has the potential to drive greater environmental impact.
Such instruments also have the potential to challenge the parameters within which ESG or sustainable funds invest. After a tumultuous 2020 as a result of the pandemic and the collapse in the oil price, the pressure on the oil and gas sector is unlikely to abate given the ever-growing focus on climate change and the energy transition from regulators and investors alike. (Heat Rising on oil producers | Aegon Insights | Aegon Asset Management (aegonam.com). Indeed, rating agency S&P’s decision to downgrade its oil and gas industry assessment in January reflects these on-going risks. The French oil company Total’s recent announcement that it will exclusively issue sustainability-linked bonds going forward is a direct response to these growing pressures and reflects a desire to position the company as a leader in the energy transition. The CEOs of BP and Norway’s Equinor recently expressed their frustration that equity markets are not giving them the benefit of enhanced ESG corporate strategies. For Total, by specifically linking its cost of debt to externally audited climate targets, failure to meet its carbon emissions targets will result in higher funding costs. And while it is likely that this debt will be in scope for the ESG/sustainable investment community, the impact may be broader still. For example, does such issuance bring Total’s other outstanding debt immediately within scope for sustainable investment? That is likely to depend on investor interpretation of the company’s targets, the company’s consistent success in meeting those targets and the severity of the financial penalties. If this is sufficiently robust then surely an increased allocation of capital to Total at the expense of, for example, a UK water company will have a greater long-term environmental impact? Either way, Total’s decision is intent on capturing a larger proportion of this growing investor demand which has the potential to erode the “greenium” and lower the company’s overall cost of funding. Other oil majors may take different approaches but BP’s £900m purchase of seabed rights to build windfarms shows the direction of travel for all majors. The way these companies access debt markets will inevitably vary.
Source: Bloomberg Intelligence Carbon-Neutral Theme Basket shows a growing number of companies setting carbon-neutral targets
Total’s announcement no doubt turns up the heat on other oil companies to follow suit. While environmental commitments, such as carbon reduction targets, are commonplace and there is an increasing willingness to link targets to executive pay, Total is the first to explicitly link its carbon emission reduction targets to funding costs via such a commitment. The credit market has already started to discount the increasing climate risks associated with investing in this sector relative to others. Total’s move will likely drive greater differentiation within the sector in terms of funding costs if other companies decide against committing to something similar. If we are ultimately to successfully transition towards a materially lower carbon intensity world, then much will depend on investors’ belief in the credibility of these self-imposed targets, and whether the financial penalties proposed are deemed to be sufficiently robust to incentivize compliance. At Aegon Asset Management we believe in engaging with - and supporting - companies with clear and defined targets that promote the collective good. To that end, Total’s move is a step in the right direction, but our 14-member Responsible Investment team (at 31/12/20) will be actively monitoring its (and other companies’) progress and enhanced commitments to a greener future.
China’s debt market is the world’s second largest after the US, but penetration among international investors is still minimal. According to Fidelity, the market is worth $16tn (£11.7tn), with its A+ sovereign bonds paying 3% yields. However, there are clear concerns over lack of widespread research, and whether allocating to Chinese debt is compatible with environmental, social and governance requirements.
Allianz Aegon
There appears to be a perfect storm brewing in bond markets. The vaccine-fuelled recovery triggering a rise in inflationary pressure has prompted expectations that interest rates could be on the rise. As a consequence, bond yields have risen sharply. The 10-year US Treasury benchmark, which started the year on 0.9%, surged to 1.61% at the end of February, before coming off slightly in March. While this is not a surprise, the speed of the rise has left many burnt. This is the worst start to the year for US bond investors in the Treasury and Gilt market since 1980. David Zahn, head of European fixed income at Franklin Templeton, sums up the sentiment: ‘I think the pace of it is probably concerning some people because it's quite a rapid rise from a very low level, but the new level they are probably not that concerned with.’
by Theo Andrew
Where are the good bonds?
Can central banks get bonds back in line?
While investors are not expecting concrete action in the medium term, they will be listening closely to the messages coming out of central banks in the coming weeks. The challenge bankers face is striking a balance between firmness and clarity without spooking markets. Zahn has concerns around the central banks’ mood shift in recent weeks, especially when it comes to their overly optimistic tone on the recovery. ‘Central bankers seem to be changing their tune a little bit about how the economy is “roaring back” and I do question whether or not that’s the right thing to do, because we still have a lot of output to make up. They need to be accommodated for a while, so I just hope they don't crunch off any recovery before it really gets going.’ Brain does not expect central banks to do anything outlandish. ‘[The banks] will be concerned about disorderly markets, but they are not going to change rates. They are going to sit back and watch the economy recover and make sure it can recover quite convincingly before they do anything.’
The big dilemma facing bond investors is how severe the sell-off could get. Last month, the US House of Representatives passed a $1.9tn (£1.37tn) Covid-19 stimulus package. Treasury secretary Janet Yellen told G20 finance ministers to follow suit. For JP Morgan, this was a significant development. The investment bank said that although the bond sell-off did have some fundamental roots, valuations look distorted, with investors pricing in an end to the asset purchasing programme. ‘US money markets have been too quick to price the beginning of the end of easy money, which is one reason to think that either the Treasury sell-off eases or the rate rise returns to being a low-vol process,’ JP Morgan said. For Pilar Gomez-Bravo, MFS Investment Management’s fixed income director, time horizon is an important consideration when examining investment opportunities. ‘The stimulus injected is papering over the cracks in the economy at present,’ she says. ‘In about 18 months, though, the markets may well begin to focus on the outsized debt on corporate balance sheets and the credit stress that poses as policymakers pull in the reins.’ Newton Investment Management’s head of fixed income, Paul Brain, feels there could be a calmer few weeks on the horizon. However, he is adopting a defensive stance, limiting his exposure to government bonds and managing interest rate exposure. The recent behaviour in fixed income markets could throw up opportunities in debt denominated in emerging market currencies, Brain believes. ‘We're looking for currencies that benefit from growth, which have been a bit beaten up by the higher interest rate expectations we've had. We do own some, but we’ll be looking to buy more as fiscal stimulus packages that are put together by governments.’ Meanwhile, Franklin Templeton’s Zahn sees the opportunities opening up in the European high yield market as the economy recovers. ‘I think high yield is an interesting place to be. Especially in the BB area, because it gives you more yield than many other parts of fixed income and is not as exposed to rising rates, but the fundamental backdrop is quite good,’ he says. Gomez-Bravo believes the best way to generate yield over the next two years is to be cognisant of duration risk, make sure your macro strategy is ‘agile’ and focus strongly on security selection. ‘Searching for yield in the liquid rather than the illiquid parts of the market may offer benefits,’ she says. She also believes the riskier end of fixed income will remain popular in the hunt for yield. ‘We believe credit and emerging market debt may do well in this context. Spreads have lagged in EMD, not compressing in line with other fixed income markets following the spread widening in March.’ ‘The hunt for yield is unlikely to abate. As long as the optimistic market narrative dominates, risk assets are expected to remain in favour.’
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We have been long-standing investors in the Nomura US High Yield Bond fund. Steve Kotsen and his experienced New York-based team are high yield specialists and apply their ‘Strong Horse’ investment philosophy to identify companies with strong, sustainable cash flows that enables them to carry their debt loads through the economic cycle. Their research-led approach gives them the confidence to hold bigger positions in higher-yielding, lower-rated credits while avoiding weaker companies more likely to default. This leads to strong portfolio returns over time with appropriate levels of risk. We share Nomura’s belief that the recovery phase has been strengthened by vaccine progress, the re-opening of economies and ongoing improvements in the labour market. The policy backdrop is also supportive, with the passage of greater fiscal stimulus looking likely and the Fed discouraging any discussion of tapering their $120bn (£86bn) monthly asset purchases. The US consumer savings rate is surprisingly high, and Nomura are expecting a meaningful release of pent-up demand as the US emerges from the pandemic in the second half of the year. We like the fund for the long-term and think it is well positioned to outperform at this mid-late recovery phase of the economic cycle, which has historically been a strong phase for high yield in general and lower-rated credits in particular.
Eric Louw, Senior investment manager, Aberdeen Standard Capital
The Finisterre Unconstrained EMD fund is a blended and dynamic emerging market debt strategy that has exhibited impressive performance across multiple market environments. The strategy combines an experienced EM-dedicated team, a well-established and proven differentiated process and a strong long-term track record. The strategy’s focus on risk management stands out not only in the investment process where the team constructs its portfolio by allocating to well-defined risk buckets which helps reflect its views on market cycle positioning, but also in the performance numbers. Indeed, the Finisterre fund proved its ability to navigate tough market conditions with downside capture ratios of less than 60% during the Taper Tantrum in 2013, 22% during the US Federal Reserve normalisation in 2018, and 64% during the Covid-19 crisis in 2020. All the while it has consistently captured most of the upside and generated material outperformance in each calendar year since inception, having finished 2020 up 8.1% with over 300bps of outperformance versus the JP Morgan EM Equal Weight index. Emerging markets should still benefit from the growth differential between EM and DM economies this year as despite the recent pickup in US real yields, we are still some way from tightening monetary policy from the US Federal Reserve. Therefore, picking a manager that can expertly pull all the levers at its disposal across all sub-sectors of EMD with such a strong focus on risk management makes sense.
We talk to four wealth managers to find out which funds they believe are best placed to navigate tough bond markets.
Gregoire Sharma, Fixed income fund analyst, Signia
Nomura US High Yield Bond
Finisterre Unconstrained EMD
In this uncertain environment consistently and stability is needed more than ever. The Newton Global Dynamic Bond fund has a stable team of 10 analysts who have an average of 20 years’ industry experience and have been at Newton for an average of 13 years. The fund has a consistent investment process resulting in positive returns in 13 out the last 14 years. The team have a breadth of experience through various market cycles with the lead manager joining the industry in 1991 and having been with Newton since 2004. The Investment process is a highly dynamic, unconstrained approach to investing in the global bond markets, altering its mix of assets to suit the prevailing economic cycle, which is ideal in this rapidly changing environment. ESG is an integral part of the investment process and is considered for all holdings, as ESG risks may affect the borrowers’ ability to repay its debt. The portfolio is split into return-seeking assets such as developed and emerging-market sovereign bonds, investment grade credit and high yield corporate bonds, and downside management positions using cash, derivatives and inflation protection assets. The multi-stage risk management process has reduced volatility and drawdown, particularly during the Covid-19 sell off.
Brendan McLean, Head of manager research, Spence and Partners
Newton Global Dynamic Bond
Our current favourite is the Schroder Sterling Corporate Bond fund run by Jonathan Golan. We invested shortly after Golan’s introduction to the fund and we have certainly not been let down. It features in both our Dynamic MPS and Bespoke solutions. The reason it’s our favourite at the moment is due to the process of the fund, which allows flexibility to weather a variety of market conditions, from the Covid crisis to the recent surge in Treasury yields. The fund has a bottom-up approach and looks for fundamentally undervalued bonds. Unlike many other corporate bond funds with a high AUM, they hold relatively few bonds issued by the largest issuers. There are 46 issuers accounting for 50% of the index and the manager only owns 14 of these. This is significant in portfolio construction as it reduces overlap when held with our other fixed income funds and reduces the correlation of holdings.
Nick Astley, investment manager, Progeny
Sterling Corporate Bond
by Ross Miller
Eric Louw is a Senior investment manager at Aberdeen Standard Capital
Gregoire Sharma is a Fixed income fund analyst at Signia
Brendan McLean is Head of manager research at Spence and Partners
Nick Astley is an investment manager at Progeny