Baillie Gifford Strategic Bond Fund B Income
Rated Fund 2013-19 Buys both investment-grade and high-yield bonds
This fund, formerly Baillie Gifford Corporate Bond, was renamed in 2018 to reflect its ability to invest across the entire range of fixed income. It’s a past winner of Money Observer’s Best Smaller Sterling Bond Fund award, and is attractive for income because it pays a monthly income and has a competitive yield of 3.6%.
Torcail Stewart has been involved in managing the fund since 2010. Lesley Dunn became his co-manager in 2018 when Stephen Roger retired after 17 years with the firm.
Unlike other funds in the strategic bond sector, this fund aims to add value almost exclusively through stockpicking and not by aggressively managing the interest rate exposure or distribution between different credit-quality bonds. The portfolio is split 70/30 between investment-grade and high-yield bonds.
The managers 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 whole sector are downgraded even though underlying companies remain sound. Their aim is to exploit these inefficiencies in the market.
The managers tend to be rather contrarian. However, they only buy bonds issued by companies they believe to be resilient and to have stable or improving financial characteristics. Moreover, they need to be convinced that an identifiable catalyst will trigger a market revaluation. The fund’s conviction-led approach means its portfolio is relatively concentrated in 60-80 holdings.
FundCalibre, the fund ratings and research provider, rates this as an ‘Elite’ fund.
Narrative and ratings content all as of 01 January 2019.See all Money Observer rated funds
|Long Gilt Future Mar19||13.23 %|
|Long Gilt Future 10yr Mar 19 - Cash||13.23 %|
|US 10 Year Ultra Future Mar19||4.27 %|
|Us Ultra 10yr Note Future Mar 19 - Cash||4.27 %|
|Euro BUND Future Mar19||3.33 %|
|Euro-Bund Future Mar 19 - Cash||3.33 %|
|Co-operative Group Ltd 7.5%||2.22 %|
|International Bank for Reconstruction and Development 1.38%||2.09 %|
|Bank of America Corporation 7%||2.06 %|
|Netflix, Inc. 3.62%||2.01 %|
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 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 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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