Royal London Sterling Extra Yield Bond Fund A
Rated Fund 2013-19. High yield with an emphasis on security
This fund won Money Observer’s Best Larger Sterling Bond Fund award in 2014 and was highly commended in 2016 and 2018. It certainly lives up to its name with its yield of almost 6%. Income is paid quarterly.
The fund is highly diverse, at almost 200 holdings. It is managed by Eric Holt, who has three decades of experience in bond markets. He offers a different perspective on bond market investing because he focuses on more esoteric, undervalued and overlooked areas, including bonds without a credit rating.
At the end of 2018, almost 40% of the portfolio was in unrated bonds. A further 35% was in sub-investment-grade stock.
Holt aims to provide investors with a high yield without taking the degree of risk normally associated with high-yield funds. For this reason, he favours bonds that are secured against specific assets, such as property or cash flow.
Holt looks to exploit bond market inefficiencies. He believes that by considering a wider investment universe than many of his peers, he can uncover value in many areas that are often overlooked, including unrated and asset-backed bonds and loans.
He does not rely on bonds’ credit ratings; the main question for him is whether there is sufficient reward for the risk being taken.
In practice, this means the portfolio will hold untypical bonds, such as the aforementioned unrated bonds, smaller issue size bonds, sub-investment-grade bonds and non-sterling bonds, where he believes valuations are attractive. He says this approach also allows him to focus on investing for the longer term.
Narrative and ratings content all as of 01 January 2019.See all Money Observer rated funds
|EI Group Plc 6.38%||2.20 %|
|Co-operative Group Ltd 7.5%||2.14 %|
|Intergen NV 7.5%||2.07 %|
|Santander UK PLC 10.06%||2.04 %|
|Electricite de France SA 5.88%||1.99 %|
|Amedeo Air Four Plus||1.76 %|
|Anglian Water (Osprey) Financing Plc 4%||1.67 %|
|Premiertel 6.18%||1.59 %|
|Heathrow Finance plc 3.88%||1.51 %|
|Phoenix Group Holdings 5.75%||1.41 %|
|United Kingdom||63.57 %|
|Europe - ex Euro||15.10 %|
|Latin America||14.38 %|
|Financial Services||48.90 %|
Eric joined Refuge Assurance’s investment team in 1979, having been initially recruited into the Actuarial department. He has overall responsibility for RLAM’s credit research process and has extensive knowledge of UK corporate bonds, which has been his main focus for twenty years. Eric is a graduate of Nottingham University with a degree in mathematics and is an associate of the Institute of Actuaries.
Data provided by Morningstar.
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