Baillie Gifford Strategic Bond Fund B Income

Sterling Bonds

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
Name
Baillie Gifford Strategic Bond Fund B Income
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
1.49
3 Year Alpha
5.20
Yield
3.4 %
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.
Holding %
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 %
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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