Rayner Spencer Mills Research (RSMR) has awarded first-time ‘R’ ratings to three fixed income funds – L&G Strategic Bond, Dodge & Cox Global Bond and Royal London Global Bond Opportunities.
The £742m L&G Strategic Bond, which is co-managed by Colin Reedie and Matthew Rees, predominantly invests in corporate bonds, and is able to hold either investment grade and sub-investment grade fixed-income securities, so long as they have credit ratings from a recognised rating service. The fund must maintain a net exposure of at least 80% to sterling at any one time.
Over three years, the fund has returned 10.7% compared to its IA Sterling Strategic Bond sector’s average loss of 0.8%.
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The RSMR team said: “This fund leverages the exceptionally strong fixed income platform at LGIM, benefiting from high level input from across the vast team, comprising fixed income managers, researchers and economists, as well as the meticulous bottom-up proprietary credit research carried out by the analysts.
“The managers have built a strong track record, having developed a repeatable and pragmatic investment proposition.”
Dodge & Cox Global Bond, which is an Ireland-domiciled ICVC, is $556.3m in size. It has returned 8.6% over three years, compared to its average peer in the offshore global fixed income sector’s loss of 0.4%.
The fund is able to invest across the full spectrum of global bond markets, with the team taking at least a five-year view on the securities they hold. While there are no limits on duration or currency within the mandate, other than to be regionally diverse, its investment-grade allocation is capped at 25%.
RSMR explained that Dodge & Cox is a “valuation sensitive” asset manager across all asset classes, and that fixed income “is no exception”.
“The philosophy is to be flexible and index-agnostic using three main levers: currency, interest rates and credit. It has a team-based approach run by committees of senior investment professionals with a coherent succession policy.
“Dodge & Cox offers a style of investing that will generally work well when valuation is recognised as a significant factor rather than momentum, but it is very conscious of including some diversification to provide some offsets.”
The third fund to be awarded a rating is the Dublin-domiciled Royal London Global Bond Opportunities fund, which invests across investment-grade, high-yield and unrated global corporate bonds.
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Co-managed by Eric Holt and Rachid Semaoune since its launch in 2015, the £302.8m fund has returned 10.7% over three years, compared to its IA Global Mixed Bond sector average’s loss of 3.1%.
The RSMR team said the fund was created so that the Royal London fixed income team could to apply their skills to managing “a truly global mandate that invests largely in credit, with a view to delivering a high level of income from a well-diversified portfolio”.
“We have known the highly-regarded Royal London fixed income team for many years and are impressed by its expertise and the extent to which it has produced consistently strong relative returns across a wide range of mandates on a regular basis.”
