Using the Lipper Leaders scoring system to analyse the best-performing funds in the IA Sterling Strategic Bond sector.   Sterling Strategic Bond allows investors, should they wish, to outsource the bond portion of their portfolios to one manager. If you don’t fancy the prospect of deciding whether to be long or short duration (a bond portfolio’s sensitivity to interest rate changes), where to be positioned between government, corporate investment grade or high yield debt, local currency or hard currency in emerging markets, or whether to be in emerging markets at all—well, this could be the solution. It is certainly a

What’s been driving returns in the IA’s Sterling Strategic Bond sector? Its portfolio managers have more flexibility than most to deal with the storms that have hit fixed income over the past couple of years. We recently took a high-level view of the Sterling Strategic Bond sector, and have since received a sack full of requests* to delve deeper, in terms of how the sector has navigated credit quality and duration. Average three-year returns for the sector (to end April 2024) were -2.64%, but vary considerably by quartile: from 7.42% to negative 13.62%.   Credit spectrum Prior to the 2022

Using the Lipper Leaders scoring system to analyse the best-performing funds in the IA Sterling Strategic Bond sector.   Investing isn’t easy. After all, most fund managers fail to beat the market after factoring in their charges. Bond investing, if anything, is harder still, with a raft of jargon from linkers through hard and soft currencies to esoteric instruments such as “cocos”. So, it’s no surprise that even professional wealth managers running client portfolios of funds will sometimes outsource the bond portion of the portfolio to someone else who will do the entire bond mix for them. That “someone else”

Strategic bond is the “go anywhere” sector that gives its managers maximum freedom within fixed income. Given last year’s market turmoil, and with many tipping the return of inflation this year, its managers may be tempted to use every bell and whistle at their disposal. Funds must invest at least 80% of their assets in fixed interest securities. This must be either sterling denominated or hedged back into sterling. Managers have more leeway than those in other bond sectors to decide the credit quality and country they invest within that 80%. They can throw the fund from 100% gilts to

Jake Moeller examines the debtor profiles of the U.K. and European high-yield and strategic bond fund sectors. In last week’s Monday Morning Memo, my colleague Detlef Glow reviewed the “liquidity riddle” in high yield bond funds. Discussions on bond fund liquidity are certainly becoming more common among investors as money continues to pour into the asset class. And this is as it should be – large flows have forced the hands of many bond fund managers to seek ways to fully invest them. Increasingly bigger funds contain more securities, and often managers are forced to move around the credit spectrum