Register to get unlimited access to all of Citywire’s fund manager database. Registration is free and only takes a minute.

Four hot shots in high yield to look out for

Citywire Investment Research runs the rule over the bond managers going above and beyond.

Market Overview

In this round-up, Citywire Investment Research zeroes in on high yield bonds as an asset class. This sub-sector has 171 fund managers rated with 6 AAA-rated fund managers, 15 AA-rated fund managers, 60 A-rated fund managers and 90 with a Citywire + rating.

Leave a comment!

Please sign in or register to comment. It is free to register and only takes a minute or two.

Highest New Entrant

Fund Manager: Kevin Mathews, Aviva Investors

Rating: A rated

Overview

Kevin Mathews is our highest new entrant in the high yield asset class entering the ratings with a Citywire A rating. Mathews runs the Aviva Investors Global High Yield Bond A USD and Aviva Investors Short Duration Gl HY Bd I USD funds along with his co-managers Sunita Kara and Brent Finck.

The fund is largely exposed to the US with 70% of net assets allocated to the region. This dwarfs the trio’s Canada exposure, which is the second largest region with 8% allocated here. The fund’s largest holding is in HCA, a Tennessee-based healthcare services company. The trio have 2.3% of the fund allocated to the company.

In the fund’s most recent monthly commentary, the manager said the global high yield bond market was boosted in July by a recovery in the oil price, which helped their 7.8% exposure to the energy sector. It was also helped by exposure to metals & mining, as commodity prices recovered. Relative to its benchmark, the fund is largely underweight BB-rated bonds at -12.79%, and heavily overweight B-rated bonds, with a 7.75 percentage point overweight.

Leave a comment!

Please sign in or register to comment. It is free to register and only takes a minute or two.

Comeback Star

Fund Manager: Patrick Houweling, Robeco

Rating: AA rated

Overview

Patrick Houweling is our comeback star for this month after regaining the AA rating he last held in May. Houweling runs the Robeco QI Dynamic High Yield IH EUR fund in the High Yield asset class alongside Johan Duyvesteyn. Houweling has been named on the fund since April 2014.

At present, the pair are largely overweight consumer cyclicals, 21.2% of the fund invested there, compared to 14% in its benchmark. It is significantly underweight communications, with just 16.8% of the portfolio allocated to it compared to 23% in its benchmark.

The managers’ commentary in July spoke of global high yield bonds and CDS indices somewhat outperforming bond indices. Together with positive sentiment on Q2 earnings, improving oil inventory figures and somewhat dovish central bank statements, this resulted in high yield bond yields trading at their lowest levels in three years.

In terms of bond ratings, the fund has a 50% exposure to BB rated bonds, compared to 52.5% in the benchmark, which is a slight underweight. It compensates by being marginally overweight CCC rated debt, with 12.6% of the portfolio allocated there compared to 8.7% in its benchmark.

Leave a comment!

Please sign in or register to comment. It is free to register and only takes a minute or two.

One to Watch

Fund Manager: Michael Scott, Schroders

Rating: AAA rated

Overview

Schroders’ Michael Scott is our One to Watch this month after achieving his fourteenth AAA rating in a row, largely due to the performance of his Schroder High Yield Opportunities A Acc fund, which he began managing in August 2012. In terms of individual performance, Scott ranks second out of 191 in our Global High Yield sector after producing a 25.4% return over a three-year period.

Scott is currently bullish on industrials, with 55.5% of the fund allocated to the sector. This is while SFR Group – a leading operator in telecoms and media – is his largest holding in the sector with 1.5% of the portfolio allocated. The Royal Bank of Scotland Group is the biggest single holding at 2% of the portfolio, with the financial sector also comprising 28% in terms of allocation.

In terms of region, 40% of the portfolio is allocated to Europe ex-UK/Middle East and another 25% to the UK. Scott commented in his latest monthly update that his EM exposure, which is 14.5% of the portfolio, proved one of the month’s positive factors. The fund has also become slightly more biased towards higher-quality issuers given stretched market conditions and valuations.

Leave a comment!

Please sign in or register to comment. It is free to register and only takes a minute or two.

Rising Star

Fund Manager: Michael McEachern, Muzinich & Co

Rating: A rated

Overview

Michael McEachern of Muzinich & Co has risen from a Citywire + rating in July to an A in August. McEachern runs a few funds in the high yield bonds asset class, including the Muzinich Credit Opportunities Fund;Supra Inst fund, the Muzinich Global High Yield Hedged GBP Acc A fund and the Muzinich Target Yield Hdg EUR Acc Fndr fund. He has been on the Credit Opportunities the longest, having started in January 2013. He co-runs this with Warren Hyland, Thomas Samson and Anthony DeMeo.

It is slightly overweight the US, with 52.2% of the portfolio allocated there relative to 50% in its benchmark. McEachern and his colleagues are also marginally underweight France, with 2.8% of the portfolio allocated to the country compared to 6.6% in the benchmark. The real discrepancies show up in their credit breakdown relative to its benchmark, with just 7% of the fund invested in BBB+ or above compared to 60% in the benchmark. The fund is also bullish on bonds with a BBB- rating, with 21% exposed there compared to just 9% in the benchmark.

In the latest monthly commentary, McEachran said his fund benefited from tighter spreads in July, which were driven by positive earnings and overall good economic fundamentals combined with low volatility. Their EM investments were helped by improving commodity prices while euro area economic momentum had a positive impact on bank holdings.

Leave a comment!

Please sign in or register to comment. It is free to register and only takes a minute or two.
Events
  • Citywire Santiago 2017

    Citywire Santiago 2017

  • Citywire Mexico 2017

    Citywire Mexico 2017

  • Citywire Miami 2017

    Citywire Miami 2017

  • Citywire New York 2016

    Citywire New York 2016

  • Citywire New York 2016

    Citywire New York 2016

  • Citywire Mexico 2016

    Citywire Mexico 2016

  • Citywire Mexico 2016

    Citywire Mexico 2016

  • Citywire Panama 2016

    Citywire Panama 2016

  • Citywire Latin America 2016

    Citywire Latin America 2016

  • Citywire Latin America 2016

    Citywire Latin America 2016

  • Citywire Miami 2016

    Citywire Miami 2016

  • Citywire Miami 2016

    Citywire Miami 2016

  • Citywire Panama 2016

    Citywire Panama 2016

  • Citywire New York 2015

    Citywire New York 2015

  • Citywire New York 2015

    Citywire New York 2015

  • Citywire New York 2015

    Citywire New York 2015

  • Citywire Santiago 2015

    Citywire Santiago 2015

  • Citywire Santiago 2015

    Citywire Santiago 2015