Investec Asset Management (Guernsey ):Sterling High Income Bond Fund
The Fund aims to generate a high level of income with opportunity of capital gains from a diversified portfolio consisting primarily of sterling denominated fixed interest securities.,
European high yield bonds delivered strong investment returns over the last quarter.
Demand for the relatively small population of high yield bonds continued to outweigh supply as low interest rates drove investors out of cash to seek high yield investments. A declining average default rate, the result of an improving economic environment and corporate restructuring, which improved balance sheets, also encouraged demand.
The Fund did not match the upward surge in the index, mainly due to its cautious strategy in the first quarter.
The Manager had focused the bulk of the Fund’s holdings on quality issues with defensive characteristics in the financial and consumer non-cyclicals sector in response to nervousness about war in and concerns that the global economy would sink back into recession. However, as economic sentiment improved following the war in , the Fund increased its holdings of more economically sensitive sectors and some insurance companies, which were benefiting from the better tone in equity markets.
We believe that the prospects for continued strength in the high yield index are good. Global interest rates remain at record lows, a significant combination of fiscal andmonetary stimulus is expected to improve growth in the and further corporate restructuring is likely to reduce the average default rate.
Top Ten Holdings.
- ABB International Finance 10% 2009
- Crown Euro Holdings 1 0.25% 2011
- Nyco Holdings 11.5% 2013
- Fimep 11% 2013
- Rhiag 10.75% 2007
- Big Food Group 9.75% 2012
- Bluewater Finance 10.25% 2012
- Eco-Bat Finance 10.125% 2013
- RHM Finance 11.5% 2022
- Gal Finance 11.5% 2009
This fund had negative returns in 2001 and 2002, but I feel that the economic climate is right for a return to favour of High Yield Bonds.
Investec has a good track record for its Bond funds.
Buy Investec Sterling High Yield Bond Fund for a diversified exposure to high yield bonds.