Lipper Leaders (UK): Flying high?

Ed Moisson uses the Lipper Leaders scoring system to analyse the best performing Sterling High Yield funds over the past three years.

Three of the funds with over £1 billion in assets in this sector all feature in the table on top-performing funds (launched at least five years ago). The fund that has been attracting most inflows of late is the Kames High Yield Bond fund, managed by Phil Milburn and Melanie Mitchell. The Lipper Leaders scores for the fund’s total return and consistent return (risk-adjusted performance relative to peers) bear out its impressive track record, not least when the lower scores for other funds featured here are compared.

Another fund above the £1bn mark is SWIP High Yield Bond, not to be confused with the Scottish Widows High Income Bond fund, not least because the former is co-managed by Steven Logan and Kevin Matthews, while Matthews is the only named manager for the latter fund. Performance has been relatively similar between the two over the past three years, although the High Income fund achieves the highest Lipper Leader ranking for capital preservation (its ability to minimise losses when compared with other bond funds).

Rounding off this triumvirate, the Stefan Isaacs-managed M&G High Yield Corporate Bond fund only just makes it into the top ten list shown here, although the fund’s Lipper Leader scores over the past five years hold up well against the other nine funds highlighted.

The fund that sits atop the list for its 3-year returns is Baillie Gifford’s High Yield Bond, managed by Robert Baltzer and Donald Phillips. One element that is striking here is that the fund has lean ongoing charges of 1.03%, although Newton’s Global High Yield Bond also scores fairly well here, at 1.15%. Kames raised the fee on its fund in March this year, so it now charges 1.31%, closer to the level levied by M&G (1.41%). Yet both Scottish Widows funds charge 1.63%, nearly 60% more than Baillie Gifford. For bond funds in particular, annual charges can really eat into returns, so such differences should not be sniffed at.