The sector has been the top selling IMA group for five straight months and the popularity of these vehicles has seen many grow rapidly in size, with the L&G fund now topping £1.6bn in assets.
With the remit to venture into any area of fixed interest as well as go long or short areas of the market, there is great scope for wide variation in portfolio returns compared to other more traditional sectors. This is particularly notable in shorter time frames. For instance the top fund over 12 months, Baillie Gifford Corporate Bond has returned 15.97%, while the bottom ranked fund, UBS Active Bond features gains of just under 1%, FE stats show. That compares to the variance in the more traditional Corporate Bond sector of a top 12-month gain of 11% and the lowest return at 2.02%. The variance in the gilt sector is even narrower; Newton Long Gilt has gained 3.80% over the year to 30 June while City Financial Strategic lost 0.43%.
Six month return variance is even more marked as managers strive to contend with the changing macro economic climate. FE data shows over six months to end of June the top Strategic bond portfolio, Baillie Gifford Corporate, gained 7.82% versus -2.26% by Old Mutual Dynamic. This compares to the 1.94% difference between the best and worst performers in the gilt space and a top return of 4.45% in the Corporate Bond sector versus the worst return of 0.77%. Even the more volatile High Yield sector has a narrower spread of returns in comparison to the Strategic Bond arena, with the best performer over six months, Aegon High Yield, gaining 4.61% while the worst, Newton Global High Yield, gained 1.37%.
