Bond funds came into focus in Square Mile’s Academy of Funds rating update for July, with seven of the 11 strategies featured having a fixed income mandate.
In terms of exits, the Lord Abbett Climate Focused Bond fund lost its ‘Responsible Positive Prospect’ rating after the announcement of lead manager Annika Lombardi’s departure.
The Square Mile analysts said that, while they acknowledge Lord Abbett’s strong resources and team approach, their rating was formed on Lombardi’s “expertise and dedication” to managing the strategy.
UBAM Positive Impact Equity fund also departed the Academy, after the firm’s decision to merge the strategy into the UBAM Positive Impact Global Equity fund.
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Meanwhile, the Baring EM Debt Blended Total Return fund was downgraded on performance concerns, from AA to A.
While the Square Mile analysts maintain a positive view for the longer term on the $448m fund, they said its medium-term performance has “not been in line with expectations”.
The strategy delivered a 5.22% return over one year, lagging the IA Global EM Bonds – Blended sector average of 7.75%, according to FE FundInfo.
Over three years, the strategy was down 14.91%, compared to the average fund which was up 2.64%.
New entrants
The Colchester Local Markets Bond fund has entered Square Mile’s Academy after being awarded an ‘AA’ rating.
“The fund boasts a strong track record over different market environments thanks to its long-established, repeatable investment process from an independent asset manager dedicated to investing in global government bonds,” analysts said.
Square Mile added it believes the strategy could be an “excellent option” for investors looking for a dedicated EM local bonds allocation in their portfolio.
The £203m M&G Positive Impact become another inductee, gaining the ‘Responsible A’ rating.
The strategy, managed by John William Olsen, aims to invest in companies that pass their ‘III’ framework, which rates companies on investment, intention, and impact metrics.
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AXA’s Sterling Credit Short Duration and Global Short Duration Bond funds have been upgraded to AA ratings.
The strategies, managed by lead portfolio manager Nicolas Trindade, have “ably managed” the volatile fixed income markets over the past few years limiting the drawdowns but capturing most of the market upside, according to Square Mile.
Elsewhere, Man GLG Sterling Corporate Bond fund upgraded from a Positive Prospect to AA rating, while M&G Emerging Markets Bond fund was also bumped up to AA.
In terms of retentions, BlackRock Continental European Income fund retained its A rating despite co-portfolio manager Andreas Zoellinger’s decision to retire in the first quarter of 2025.
The strategy will be run by longstanding co-manager Brian Hall, who will be joined by Stuart Brown.
FTGF ClearBridge US Equity Sustainability Leaders fund also held onto its Responsible A rating despite news of the retirement of co-manager Derek Deutsch.
The strategy’s dedicated portfolio analysts, Benedict Buckley and Dimitry Dayen, will become portfolio managers alongside current co-portfolio manager Mary Jane McQuillen.
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