Aberdeen Investments has launched a global enhanced yield fund, which is available to investors in the UK as well as Europe and Hong Kong.
The Aberdeen SICAV I Global Enhanced Yield fund, which is Article 8 compliant under SFDR, aims to enhance its returns through maximising the coupons it receives, as well as the income earned by holding such investments.
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At least 70% of the fund will be held across developed market assets, although up to 30% can be allocated to emerging market credit. The average credit risk across the portfolio will stand at BB-, while volatility will ideally be kept in line with that of the Global High Yield index.
George Westervelt, head of global high yield at Aberdeen Investments, said: “In an environment where financial markets are increasingly influenced by volatile and opaque macroeconomic headlines, dependable coupon income plays a critical role in both preserving and strengthening total returns for our investors.
“Global high yield remains one of the most compelling segments in fixed income. But unlocking its potential isn’t straightforward. Coupon income can consistently drive total returns – but capturing it requires more than passive exposure.
“A global, risk-aware approach that combines diversification, disciplined credit selection and robust risk management can help investors harness the power of high yield without stretching into excessive risk.”
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According to Westervelt, global high-yield bonds have achieved average returns of between 6-7% over the past 20 years. But over the past five, 10 and 20 years, coupon income has accounted for an average of 110% of these total returns, according to research from Aberdeen.
“Adopting a global approach to high-yield investing enables access to a wider range of yield and credit quality across regions, he continued. “This supports a portfolio construction approach focused on maximising income, without the need to venture into the riskiest segments of the developed market.”
