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October 27, 2014

Monday Morning Memo: Popular High Yield Bond Funds in Europe

by Jake Moeller.

Lipper’s Jake Moeller examines how European fund-of-funds managers are gaining their exposure to high yield bond funds in September 2014.

Reuters/ Arben Celi

Reuters/ Arben Celi

According to Lipper FundFile data, flows into bond funds in Europe in the nine months to September 2014 (€150bn) are double those going into equity funds (€75bn), showing just how resilient the bond rally has been. High yield has been a prime beneficiary as investors eke out income in an ongoing low-interest-rate environment.

In local currency terms European high yield, with a 7.9% return, has had the strongest 12 months, with global high yield returning 2.2% over the same period. European fund-of-fund managers have generally done well, opting for local high-yield exposure (258 buyers for European high yield as opposed to 174 buyers for U.S. high yield) and using over 350 different funds and share classes to obtain their exposure.

Table 1. Performance of Lipper High Yield Bond Classifications – 12 Months to End of September 2014 (in Local Currency).

Nordea 1-European High Yield Bond BI EUR, with 39 buyers, has proven the most popular and has returned 8.6% over the last 12 months. Muzinich Short Duration High Yield Hdg EUR Acc—in the USD Bond HY sector, with 32 buyers and a more modest 1.8% return—has come in as the second most popular fund. There is only one fund with lower performance: Euro Renten HY P, with 0.5% for the 12 months and with one European buyer.

Table 2. List of High Yield Bond Funds Ranked by European Buyer Popularity (September 2014).

Source: Lipper FundFile

Source: Lipper FundFile

The top-performing fund in this space has been City Merchants High Yield Trust PLC, with a 26.6% return for the last 12 months. This has also been written by only one European buyer. Well-represented strong performers include Neuberger Berman High Yield Bond USD Inst Acc, with 13.1%; Jupiter Strategic Bond I Inc GBP, with 14.7%; and Kames Capital High Yield Bond Inc B, with 13.3%.

Passive options, generally less popular in fixed income funds than in equity funds, make three appearances in the 25 most popular funds, with iShares Euro High Yld Corporate Bd UCITS ETF—with 28 buyers—coming in fourth place overall.


Lipper delivers data on more than 265,000 collective investments in 61 countries. Find out more.

This material is provided for as market commentary and for educational purposes only and does not constitute investment research or advice. Refinitiv cannot be held responsible for any direct or incidental loss resulting from applying any of the information provided in this publication or from any other source mentioned. Please consult with a qualified professional for financial advice. The author does not own shares in this investment.

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