Top ranked funds Newcomers
With the exception of Crédit
Agricole Asset Management’s
(CAAM) Global
Aggregate Fund, all the
newcomer portfolios have
lost money in the past 12
months, with downside
ranging from around 50
basis points to a more eyebrow-raising
21%.
This fact makes the performance
of the Credit
Agricole fund all the more
impressive. As OBSR’s
Toogood highlighted on
page 20, the varying mandates
in this sector give
some managers more
scope than others to generate
returns and this fund is
a case in point.
It seeks to outperform
the Lehman Global Aggregate
Hedged Index through
investment in BBB or
higher rated debt. CAAM
says it seeks to achieve this
through strategic, tactical
and arbitrage position
based on duration, interest
rate and currency plays –
an opportunity set that is
broader than that of its
benchmark index.
The company attributed
the recent good performance
to reducing overexposure
to duration,
although an overweight
position to eurozone countries
and underweight US,
Japan and the UK detracted
from this.
Alan Orchard, director
of RBC Wealth Management
in Jersey, says that, the
CAAM fund aside, many
funds in this group are
likely to have been
launched only shortly
before market conditions
deteriorated so were facing
an uphill struggle to generate
returns.
He says: “One has to
feel a little sorry for funds
in the newcomers category,
as the nature of the industry
means that they were
probably launched when
leverage and risk were king
and most of the funds are
completely wrong for what
has happened over the past
18 months.
“Pictet’s PF (Lux) World
Government Bond Fund
has managed to avoid this
trap and benefited from
the flight to quality by
being a government bond
fund with no active currency
risk.
“The CAAM Global
Aggregate Fund stands out
as the only product that
added value at all, and
their dynamic approach
has actually put them in
first place in the sector
over this short period.
top 10 funds with less than a 3-year but at least a 1-year track record
25 Feb ’08 – 23 Feb ’09. Bid to bid, $, gross income, no cap. Source: Morningstar
top 3 newcomers vs index
%
12
CAAM Funds Global Aggregate C
PF (Lux) World
6
0
Govt Bonds R
Aegon Strategic
Global Bond A $
-6
-12 M’star IM FI Global $
Mar ’08 May Jul Sep Nov
24 Mar ’08 – 23 Mar ’09. Source: Morningstar
“In general, I would still
look to the funds with
longer track records for
exposure to this sector.”
l Weak and exposed
The remainder of the funds
have suffered badly in the
past year, possibly because
many had high corporate
debt exposure.
Standard & Poor’s
Mashiter explains: “A lot of
investors were rushing for
the exit last year, which
effected corporate credit
funds in particular. Some
mangers thought credit
had become cheap so
met redemptions by selling
the more liquid, higher
quality holdings.
“Others sold the poorer
performing assets, which
incurred higher transactions
costs, but with the
benefit of hindsight of
course, would better position
the fund for any
further deterioration in
credit markets.”
Fund selector Global Fixed income
1-year 1-year 1-year 1-year 1-year 1-year Launch Fund Dom
% chg Alpha Beta R² Sharpe volatility date size (£m)
CaaM Funds global aggregate C 10.27 0.23 0.21 0.04 0.12 1.09 30 Oct ’07 25.59 lux
PF (lux) World government Bonds R -0.57 0.2 1.24 0.7 -0.05 1.41 28 Jun ’07 140.44 lux
aegon Strategic global Bond a $ -4.31 0.04 0.71 0.35 -0.12 1.14 8 nov ’07 n/S ireland
uBaM absolute Return $ aC -6.83 -0.14 -0.04 0 -0.26 0.72 11 Jul ’07 6.5 lux
FPil Mellon global Bond $ -7.77 0.13 1.66 0.56 -0.1 2.1 23 Oct ’06 1.11 ioM
BgF Fixed income glbl Opportunities a2 $ -12.98 -0.14 0.66 0.12 -0.17 1.83 31 Jan ’07 89.88 lux
FF – international Bond ii sgd -14.32 -0.07 1.37 0.87 -0.25 1.4 18 aug ’06 21.15 lux
aegon investment grade global Bond a $ -14.84 -0.18 0.77 0.35 -0.3 1.22 8 nov ’07 n/S ireland
FF – inst Res global Bond $ -21.74 -0.26 1.22 0.36 -0.27 1.94 24 apr ’06 0.01 lux
Schroder iSF global Conv Bond a $ -21.83 -0.25 1.27 0.37 -0.26 1.98 14 Mar ’08 48.99 lux
top 10 newcomers – 1-year risk and return
May 2009 [www.international-adviser.com] INTERNaTIONaL aDVISER
Jan ’09
Mar
Return (%)
12
6
CAAM Funds
Glbl Aggregate C
0 Aegon Strategic
Global Bond A $
PF (Lux) World Gov Bonds R
BGF Fix Inc Glbl Opps A2 $
-6
Sector avg
FPIL Mellon
Glbl Bond $
-12
UBAM Absolute
-18
Return $ AC
FF Inst Res Glbl Bond $
-24
Aegon Inv Grade
Global Bond A $ FF Int’l Bond II SGD
Schroder ISF
Glbl Conv Bd A $
0.5 1 1.5
Standard deviation (%)
2 2.5
24 Mar ’08 – 23 Mar ’09. Bid to bid, $, gross income, no cap
Source: Morningstar
Fund selector’s choice
Peter Toogood, director of
investment services, OBSR
The two funds offered by Aegon Asset
Management – Strategic Global Bond and
Investment Grade Global Bond – stand out
amongst the new offerings in the sector.
Benchmarked against the Barclays Capital
Global Aggregate Index, they bring the strategies managed by Philip
Milburn and David Roberts to the offshore market.
The managers’ unconstrained and concentrated investment
approach enables them to use the bottom-up research of a large fixed
income team to capitalise on ideas across the fixed income universe.
In line with many of their counterparts, the pair believe investment
grade credit spreads are unjustified by company fundamentals and
offer excellent medium-term value. So the funds currently comprise
meaningful exposure to corporate bonds.
The Schroder ISF Global Convertible Bond also appears in
the newcomers list. Its management is outsourced to Fisch Asset
Management, a Swiss-based convertible bond specialist with a long
history and strong reputation in the asset class. Along with other
convertible bond funds, it struggled in relation to the broader global
fixed income universe as the asset class became a high-profile
casualty of last year’s hedge fund deleveraging.
Alongside the demise of many convertible arbitrage strategies, the
dominant players in the asset class, the Lehman Brothers bankruptcy
also flooded the market with convertibles and helped drive down
prices. The resulting distressed pricing offered significant value
on both an absolute basis and relative to the individual bond and
equity components.
While much of this dislocation has since been unwound,
convertible bonds still offer attractive yields with the potential
for equity participation over the medium term.
21
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