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Four fund managers to watch in high yield

Citywire Investment Research uncovers the managers performing strongly in high risk debt.

Market overview

There are 158 managers who have received ratings within the high yield bonds asset class this month. Out of this a total of 6 were AAA rated, 20 AA, 46 A and 86 achieved a + rating.

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Highest new entrant

Fund manager: Nicholas Ware-Fredriksson, Henderson Global Investors

Rating: + rated in Bonds - Sterling High Yield

Overview

Nicholas Ware-Fredriksson entered our analysis as one of the highest new entrants in high yield bonds this month with a Citywire + rating. Over the last three years, he returned 19%, while the average manager in the Bonds – Sterling High Yield sector returned 17.1% in sterling terms.

The fund contributing to his positive risk-adjusted performance is the Henderson Fixed Interest Monthly Income fund, which he co-runs with Jenna Barnard and John Pattullo.

The fund has 150 holdings with no bond accounting for more than 1.8% of the portfolio. Among the largest holdings is the German cable Unitymedia GmbH, which accounts for 1.5% of the fund's investments. In terms of market outlook, the manager believes bond yields have accommodated much of this reflation trade already and, as a result, have become more attractively priced with time.

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Comeback star

Fund manager: Gershon Distenfeld, Alliance Bernstein

Rating: + rated in Bonds - Global High Yield

Overview

The comeback star for this month is Citywire + rated Gershon Distenfeld, who was last rated over one year ago in February 2016. His performance in the sector is drawn from the AB SICAV I-Short Duration High Yield Pf I2 USD, AB (HK) Global High Yield Portfolio A2 RMB H and AB FCP I-Global High Yield Portfolio I USD funds.

The $21 billion AB Global High Yield Portfolio fund is highly diversified with a total 1,069 of holdings. By far, the largest portfolio bet is on emerging markets securities, with Brazilian and South Africa government debt the two single largest positions. Portfolio statistics indicate a yield-to-worst of 6.21% and an average credit quality of BB-.

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One to watch

Fund manager: Konstantin Leidman, Schroders

Rating: AAA rated in Bonds - Euro High Yield

Overview

The manager to watch this month is AAA-rated Konstantin Leidman, who has been consistently rated AA and AAA by Citywire for the last ten consecutive months.

Leidman returned 19.1% over the past three years, while the average manager in Bonds - Euro High Yield delivered a return of 12.4% in EUR terms. The contributor to his performance in the sector was the Schroder ISF EURO High Yield A Acc fund.

The manager’s largest regional investment is the UK, which accounts for 25.6% of the portfolio and has an overweight allocation of 15.5% against the BofA Merrill Lynch Euro High Yield Constrained Index. In terms of sector allocations financials makes up 29% of the fund’s investments and is 9.4% overweight versus the benchmark. The largest holdings in the 252-holding portfolio is Scottish financial services company RBS, followed by Brazilian gas giant Petrobras.

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Rising star

Fund manager: Roeland Moraal, Robeco

Rating: A-rated in Bonds - Euro High Yield

Overview

Moving up the ratings this month is Roeland Moraal, who has risen from a Citywire + rating to be A-rated this month. His performance is drawn from the Robeco European High Yield Bonds DH EUR fund, which has been under his management since inception in October 2005.

Over 10 years, Moraal returned 89.4% while the average manager in the Bonds – Euro High Yield sector returned 69.1% in euro terms over the same time period.

The largest contributor to the fund's performance was his overweight position in the European steelmaker ArcelorMittal, which has moved back to be investment grade rated. The company continues to expand having recently submitted an offer for Ilva with a commitment of over €2.3 billion additional investments to the purchase price.

In terms of top ten holdings, Moraal is focused on communications, with cable companies sitting high in his allocations. Among these is the British internet and telecommunications company Virgin Media, which accounts for 2.14% of the fund's allocations. Other names are the German cable television provider Unity Media at 2.74% and Dutch telecommunications company Koninklijke Kpn Nv at 1.81%.

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Related Fund Managers

Gershon Distenfeld
Gershon Distenfeld
7/91 in Bonds - US Dollar (Performance over 3 years) Average Total Return: 10.57%
Konstantin Leidman
Konstantin Leidman
142/237 in Bonds - Global High Yield (Performance over 3 months) Average Total Return: 1.78%
Nicholas Ware-Fredriksson
Nicholas Ware-Fredriksson
9/13 in Bonds - Sterling High Yield (Performance over 3 years) Average Total Return: -8.54%
Roeland Moraal
Roeland Moraal
6/49 in Bonds - Europe High Yield (Performance over 3 years) Average Total Return: 15.88%
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