You are here: Home - Investing - Experienced Investor - News -

Fund of the fortnight: Henderson Strategic Bond

0
Written by:
21/11/2014
Every fortnight our research experts highlight a fund from their top-rated list. The latest: the Henderson Strategic Bond fund.
Fund of the fortnight: Henderson Strategic Bond

This fund falls into the IMA Strategic Bond Peer Group. Generally speaking, these fixed income mandates provide the manager with much greater flexibility to allocate across the fixed income universe. The mandates also usually allow for the use of derivatives to assist in managing portfolio risk; this might be to insure the portfolio against the risk of rising interest rates or the risk of a rise in corporate bond defaults.

We expect these funds to tread the line between quality bond funds and high yield bond funds; adding value by astute asset allocation and credit selection.

The Henderson Strategic Bond fund was launched in 2006 and has been managed by John Pattullo and Jenna Barnard throughout. The managers’ current strategy is very much one of focusing on income generation at an acceptable level of risk. Their belief is that interest rates will remain lower for longer and against this backdrop, the search for yield will continue. In order to achieve this yield objective, the portfolio is invested predominantly in corporate bonds in the middle to low end of the rating spectrum (BBB, BB and B).

The managers accept that going forward, the market is likely to experience further bouts of instability; as a result, the positions they have built in this part of the market are conservative. Within BBB and BB rated securities, the portfolio focus is on bonds issued by large, established corporations; whilst in the lower rated B category, exposure is in more non-cyclical companies. They are also avoiding more illiquid/esoteric trades. The team have also been disciplined in building cash, once valuations start to appear stretched – portfolio cash levels going into October 2014 were in low/mid-teens. They have since started to deploy this cash with some bonds trading at lower prices. On top of the deliberate yield centric strategy, the application of charges to capital further enhances the yield available. The fund’s distribution yield on the 31st of October 2014 was 5.4 per cent, after charges and gross of tax.

Rob Harley is director of research at Tilney Bestinvest.

For more Fund of the Fortnight reviews click HERE.


Related Posts

Tag Box

There are 0 Comment(s)

If you wish to comment without signing in, click your cursor in the top box and tick the 'Sign in as a guest' box at the bottom.

The savings accounts paying the most interest

If one of your jobs this month is to get your finances in order, moving your savings to a higher paying deal i...

Coronavirus and your finances: what help can you get?

News and updates on everything to do with coronavirus and your personal finances.

Everything you need to know about being furloughed

If you’ve been ‘furloughed’ by your company, here’s what it means…

What will happen if rates change

How your finances will be impacted by a rise in interest rates.

Regular Savings Calculator

Small regular contributions can build up nicely over time.

Online Savings Calculator

Work out how your online savings can build over time.

Having a baby and your finances: seven top tips

We’re guessing the Duchess of Cambridge won’t be fretting about maternity pay or whether she’ll still be...

Protecting family wealth: 10 tips for cutting inheritance tax

Inheritance tax - sometimes known as 'death tax' - can cause even more heartache for bereaved families. But th...

Travel insurance: Five tips to ensure a successful claim

Ahead of your summer holiday, it’s important to make sure you have the right level of travel cover or you co...

Money Tips of the Week

Read previous post:
FTSE 100: This morning’s risers and fallers

The UK stock market rebounded on Friday morning after two days of declines, as mining shares recovered after recent losses.

Close