Head of Corporate Bonds, Senior Portfolio Manager
This bond fund aims to generate steady income and achieve above-average investment returns over a full credit cycle, while respecting risk diversification.
The fund invests mainly in developed-market corporate bonds of issuers of good quality (investment grade) denominated in euros. These bonds have different maturities and seniorities. Their issuers are from different industries and have various credit ratings. The focus is on the rating segment in which credit spreads compensate adequately for the risks involved, namely the mid-yield segment (ratings A+ to BBB-). The fund uses derivative financial instruments, mainly for hedging purposes.
The seasoned investment specialist team applies a dedicated credit-selection style and takes investment decisions based on fundamental credit, relative-value, and technical analyses. Top-down assessment of both the economy and various industries is followed by bottom-up company analysis. Through a filtering process, the team identifies industries and investable corporate bonds whose credit spreads compensate adequately for the risks involved. For efficient diversification, the team strives to hold a variety of issuers and instruments with a view to exploit inefficiencies
“In a low-yield environment, bonds in the mid-yield segment can offer investors a steady return.”
Our investment process begins with a top-down review, where we look at the development of key macro- and microeconomic data, taking into account technicals such as new supply and asset flows into or out of the asset class.
Then, we zoom in, identify, and filter to create a list of potential investable credit ideas. This is followed by a thorough bottom-up analysis on the credits that pass our filter, resulting in a fundamental company view. By bringing this together with our overall market valuation, we come to a buy/hold/sell decision.
We then construct our portfolio based on regional, sector, issuer, duration, and other considerations (see table below). We invest a minimum of 67% of our portfolio into the mid-yield segment (credit rating A+ to BBB-) and a maximum of 20% into non-investment grade bonds with a BB rating to capture future rising stars.
Historically, investment-grade credit has produced positive returns even in recessionary and no-growth environments, with investment-grade excess returns showing less sensitivity to the economic cycle.
The mid-yield segment (corporate bonds with a rating between A+ and BBB-) provides investors with higher yields than top-rated government bonds, while still maintaining a solid credit rating. This is a compelling income-generating proposition for investors in the current low-yielding environment.
Investors can benefit from the mid-yield segment’s susceptibility to ratings migration, with bonds moving up or down the rating scale. The trend towards upward rating migration is evident in the fact that the proportion of A-BBB rating buckets has almost doubled over the last 20 years. Furthermore, downgrade transition can also offer investors with opportunities as forced sellers who cannot hold BBs have to liquidate their holdings.
The credit market is slow to react to new trends and therefore presents investment opportunities across industries, structures and issuers. By taking a flexible approach to identifying and selecting industries and corporate bonds where the spread premium more than compensates for the credit risks taken, we believe we can capture and preserve value for our investors over time.
Mondher Bettaieb, Head of Corporate Bonds, manages the fund, supported by the members of his Corporate Credit team in Zurich and New York. The team also has at its disposal the full capabilities of the Fixed Income boutique. This optimal team structure enables proactive early idea generation and implementation.
All data is as at Aug 31 2020 unless otherwise indicated.
|Sep 01 2015 - Aug 31 2016||Sep 01 2016 - Aug 31 2017||Sep 01 2017 - Aug 31 2018||Sep 01 2018 - Aug 31 2019||Sep 01 2019 - Aug 31 2020|
|Yield to maturity||1.8%||0.7%|
|Active Share (country, issuer, ISIN)||32% / 69% / 92%|
|[3 years annualized]|
All data is as at Sep 29 2020 unless otherwise indicated.
|Portfolio Manager||Mondher Bettaieb Loriot|
|Share Class Currency||EUR|
|End of fiscal year||31 August|
|Index||ICE BofAML A-BBB Euro Corporate Index|
|Share Class Launch date||Jul 13 2007|
|Swinging single pricing||Yes|
|Fund Registrations||AT, CH, DE, ES, FI, FR, GB, IE, IT, LI, LU, NL, NO, PT, SE, SG|
|Share Class Registrations||AT, CH, DE, ES, FI, FR, IT, LI, LU, NL, NO, SE, SG|
|Highest since launch||176.10|
|Lowest since launch||81.91|
|Fund volume in mln.||EUR 2,641.46|
|Share class volume in mln.||EUR 1,157.06|
|TER||0.75% (Feb 28 2020)|
|Depository||RBC Investor Services Bank S.A.|
|Management Company||Vontobel Asset Management S.A.|
|Swiss Paying Agent||Bank Vontobel AG|
|Swiss Representative||Vontobel Fonds Services AG|
|Share class||Currency||ISIN||Distrib.||Type||Launch date||Management fee||TER||TER Date|
|A||EUR||LU0153585566||Dist||Retail||Sep 27 2002||1.10%||1.34%||Feb 28 2020|
|AI||EUR||LU1258889689||Dist||Institutional||Jul 14 2015||0.55%||0.75%||Feb 28 2020|
|AN||EUR||LU1683480963||Dist||Retail||Oct 03 2017||0.55%||0.79%||Feb 28 2020|
|B||EUR||LU0153585723||Accum||Retail||Sep 27 2002||1.10%||1.34%||Feb 28 2020|
|C||EUR||LU0153585996||Accum||Retail||Jul 16 2007||1.50%||1.74%||Feb 28 2020|
|H (hedged)||CHF||LU0863290267||Accum||Retail||Jan 16 2013||1.10%||1.40%||Feb 28 2020|
|HI (hedged)||USD||LU1054314221||Accum||Institutional||Apr 10 2014||0.55%||0.81%||Feb 28 2020|
|HI (hedged)||CHF||LU1047498362||Accum||Institutional||Mar 31 2014||0.55%||0.81%||Feb 28 2020|
|HN (hedged)||CHF||LU1767066514||Accum||Retail||Feb 09 2018||0.55%||0.85%||Feb 28 2020|
|HN (hedged)||GBP||LU1092317624||Accum||Retail||Oct 06 2014||0.55%||0.85%||Feb 28 2020|
|I||EUR||LU0278087860||Accum||Institutional||Jul 13 2007||0.55%||0.75%||Feb 28 2020|
|N||EUR||LU1612361102||Accum||Retail||May 30 2017||0.55%||0.79%||Feb 28 2020|
* TER includes performance fee where applicable
All data is as at Aug 31 2020 unless otherwise indicated.
|Factsheets & Commentaries|
|Monthly Commentary||Aug 2020|
|Product Flyer||Oct 2019|
|AGM EGM invitation||Jan 2020|
|Articles of Association||Apr 2016|
|Notification to Investors||Apr 2020|
|Sales Prospectus||Dec 2019|
|Annual Report||Aug 2019|
|Dividend Payout||Jan 2019|
|Semi-Annual Report||Feb 2020|
|Holiday Calendar 2020||Jan 2020|
|List of Active Retail Share Classes||Dec 2018|
|Sanctioned Countries||Sep 2016|
|Shareclass Naming Convention||Nov 2019|
Limited participation in the potential of single securities
Success of single security analysis and active management cannot be guaranteed
It cannot be guaranteed that the investor will recover the capital invested
Derivatives entail risks relating to liquidity, leverage and credit fluctuations, illiquidity and volatility
Interest rates may vary, bonds suffer price declines on rising interest rates
Investments in foreign currencies are subject to currency fluctuations
Mid-yield bonds may be more speculative investments than bonds with a higher rating due to higher credit risk, higher price fluctuations, a higher risk of loss of capital deployed
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