Fixed Income Boutique Corporate Bonds

Vontobel Fund - EUR Corporate Bond Mid Yield

ISIN
LU0863290267
Valor
20187732

Fund strategy

Investment objective

This bond fund aims to generate steady income and achieve above-average investment returns over a full credit cycle, while respecting risk diversification.


Key features

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.


Approach

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

122.47
NAV
-0.24%
Performance YTD
As at Aug 04 2020

Why invest?

  • Solidity: Credit is a stable asset class in the long term
  • Variety of opportunities: Credit portfolios offer better diversification
  • Mid-yield focus: Significant rating migration of European debt issuers

“In a low-yield environment, bonds in the mid-yield segment can offer investors a steady return.”

Mondher Bettaieb, Head of Corporate Bonds

Our investment process

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.

infograph-product-euro-mid-yield_en

Investment opportunity – excess returns through the cycle

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.

Investment philosophy – focus on credit selection

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.

Investment team

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 Jun 30 2020 unless otherwise indicated.

Daily Performance

Periodic Performance

1M YTD 3Y 5Y SI
H (hedged) CHF 1.1% -2.5% 0.8% 1.4% 19.7%
Index 1.3% -1.6% 1.4% 1.9% 19.3%

Rolling Performance

Jul 01 2015 - Jun 30 2016 Jul 01 2016 - Jun 30 2017 Jul 01 2017 - Jun 30 2018 Jul 01 2018 - Jun 30 2019 Jul 01 2019 - Jun 30 2020
H (hedged) CHF 2.6% 2.3% -0.9% 4.4% -1.1%
Index 4.2% 1.0% 0.7% 4.5% -0.9%

Annual Performance

Risk Data

Portfolio Index
Yield to maturity 2.0% 1.0%
Modified duration 5.5 5.3
Volatility 6.9%
Average rating BBB BBB+
Average coupon 2.8% 1.8%
Average maturity 6.1 5.8
Active Share (country, issuer, ISIN) 33% / 68% / 91%
[3 years annualized]
Past performance is not a reliable indicator of current or future performance. Performance data does not take into account any commissions and costs charged when shares of the fund are issued and redeemed, if applicable. The return of the fund may go down as well as up due to changes in rates of exchange between currencies. The value of the money invested in the fund can increase or decrease and there is no guarantee that all or part of your invested capital can be redeemed.

All data is as at Aug 04 2020 unless otherwise indicated.

Fund data
Portfolio Manager Mondher Bettaieb Loriot
Fund Domicile Luxembourg
Fund Currency EUR
Share Class Currency CHF
End of fiscal year 31 August
Index ICE BofAML A-BBB Euro Corporate Index hedged CHF
Share Class Launch date Jan 16 2013
Distribution type Accum
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, IT, LI, LU, SG
Nav Information
Highest since launch 125.07
Lowest since launch 97.99
Fund volume in mln. EUR 2,722.47
Share class volume in mln. CHF 69.56
Fees And Expenses
Management fee 1.10%
TER 1.40% (Feb 28 2020)
Identifiers
ISIN LU0863290267
Valor 20187732
Bloomberg VONCHFH LX
WKN A1KBR1
Parties
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

Available Share Classes

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
Click here to see an overview of our shareclass naming convention.

* TER includes performance fee where applicable

All data is as at Jun 30 2020 unless otherwise indicated.

Rating Structure

Document Date DE EN ES FR IT
Factsheets & Commentaries
Factsheet Jun 2020
Monthly Commentary Jun 2020
Brochures
Product Flyer Oct 2019
KIIDs
KIID Jul 2020
Legal Documents
Articles of Association Apr 2016
Notification to Investors Apr 2020
Sales Prospectus Dec 2019
Financial Reports
Annual Report Aug 2019
Dividend Payout Jan 2019
Semi-Annual Report Feb 2020
Dealing Information
Holiday Calendar 2020 Jan 2020
List of Active Retail Share Classes Dec 2018
Policies
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

Morningstar rating: © 2020 Morningstar, Inc. All rights reserved. The information contained herein: (1) is proprietary to Morningstar and/or its content providers; (2) may not be copied or distributed; and (3) is not warranted to be accurate, complete, or timely. Neither Morningstar nor its content providers are responsible for any damages or losses arising from any use of this information.