Factsheet: Baillie Gifford Strategic Bond B Acc

Sterling Bonds

Rated Fund 2013-2018. Buys both investment grade and high yield bonds

Baillie Gifford Corporate Bond has not performed as strongly as other Rated Funds, but a high allocation to investment grade bonds accounts for this. A past winner of Money Observer's Best Smaller Sterling Bond Fund award, it is attractive to income seekers because it pays a monthly income and has a competitive yield of 3.5 per cent.

Unlike other managers in the strategic bond sector, Stephen Rodger and Torcail Stewart aim to add value almost exclusively through their stock-picking prowess and do not aggressively manage the interest rate exposure or distribution between different credit quality bonds. The portfolio is split 70/30 between investment grade and high-yield bonds. Rodger and Stewart point out that past experience shows this to be the optimal positioning to reduce risk and maximise returns.

They look at three factors -- the macroeconomic situation, bond valuations and company-specific risk and return considerations. Macroeconomic concerns can throw up attractive valuations, when bonds across a sector are downgraded even though underlying companies are sound. Their aim is to exploit these inefficiencies in the market.

Though they tend to be rather contrarian, going against market consensus, the managers only buy bonds issued by companies that they believe are resilient, with stable or improving financial characteristics. They also need to be convinced that there is an identifiable catalyst that will trigger a market revaluation. They only invest in bonds in which they have a strong conviction, so the portfolio is relatively concentrated, with typically 60 to 80 holdings.

FundCalibre, the fund ratings and research provider, rates this as an 'Elite' fund on the strength of the managers' expertise and 'excellent' performance.

Narrative and ratings content all as of 01 January 2018.

See all Money Observer rated funds
Name
Baillie Gifford Strategic Bond B Acc
Manager
Baillie Gifford & Co Limited.
Type
Open Ended Investment Company
ISIN
GB0005947741
Sector
£ Strategic Bond
Launched
26/02/1999
OCF
0.52 %
Risk Rating
5
3 Year Sharpe
1.03
3 Year Alpha
3.92
Yield
3.5 %
Benchmark
ICE BofAML Sterling Non-Gilt TR GBP
The objective is to produce monthly income. Potential capital growth is also sought, subject to prevailing market conditions. The Sub-fund will be actively managed through bond selection and strategic asset allocation. The Sub-fund will invest primarily in a diversified portfolio of fixed interest securities denominated in sterling or denominated in currencies other than sterling and hedged back to sterling. Such securities include investment grade and sub-investment grade bonds issued by companies worldwide. Currency forwards and derivatives may be used from time to time in keeping with the Sub-fund’s objective with the intention of either protecting or enhancing the return on the Sub-fund. The Sub-fund may also invest in other fixed interest securities, money market instruments, equities, cash and near cash.
Holding %
Long Gilt Future 10yr Jun 18 10.79 %
Long Gilt Future 10yr Jun 18 - Cash 10.79 %
Us Ultra 10yr Note Future Jun 18 3.82 %
Us Ultra 10yr Note Future Jun 18 - Cash 3.82 %
Euro-Bund Future Mar 18 2.78 %
Euro-Bund Future Mar 18 - Cash 2.78 %
Canada 10yr Bond Future Jun 18 2.65 %
Canada 10yr Bond Future Jun 18 - Cash 2.65 %
Bertelsmann Se&Co 2.62 %
Pension Ins 6.5% 2.55 %
Region %
Sector %
Name
Baillie Gifford & Co Limited.
Address
EH1 3AN, Edinburgh, United Kingdom
UCITS
Yes
Legal Structure
Open Ended Investment Company

Managers

Lesley Dunn
Joined 01/10/2018

Lesley Dunn - graduated from Strathclyde University with a BSc (Hons) in Maths, Statistics & Economics in 2000. She worked for Scottish Widows Investment Partnership for 15 years, initially in the investment grade team before moving to manage the company’s high yield portfolios. Lesley is an Investment Manager in the High Yield Team & is a CFA Charterholder.

Torcail Stewart
Joined 06/01/2010

Torcail graduated BA in Geography from the University of Cambridge in 2002 and M.Phil in Management, Economics and International Relations from the University of St Andrews in 2005. From 2006 to 2008 he worked as an Investment Analyst for the Alliance Trust’s UK Large Cap equity fund. Torcail is a member of the UK Society of Investment Professionals (UKSIP). He joined Baillie Gifford in 2008 and is an Investment Manager in the Credit Team.

Stephen Rodger
Joined 09/01/2000

Stephen graduated BSc (Hons) in Management Science from the University of St Andrews in 1990 and an MSc in Accounting and Finance from the London School of Economics in 1994. He joined Baillie Gifford in 2000 and is Head of the Credit Team. Stephen became a Partner in 2008.

Data provided by Morningstar.

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