Money Observer Fund Awards 2018 -Global Bond

July 17, 2018

BEST FUND

Marlborough Global Bond

1-year return: -1.3% | 3-year return: 13.9%

Marlborough Global Bond is a record-breaker among our award winners, having picked up this award in six out of the past seven years (2016 being the exception). It has also been part of our Rated Funds line-up since 2013. Although this fund is far from the top performer in the IA global bonds sector (its performance over three years is in the second quartile of its peer group), the panel overruled the statistics with a qualitative view in this case, favouring the broader-based, more conservative Marlborough fund.

It acts as a one-stop shop for cautious bond investors: the managers adopt a conservative approach to investing, that aims to capture gains when markets rise while protecting investors’ money when they fall. At the helm is Geoff Hitchin, who helped with the fund’s launch in 1987 and has now managed it for 30 years. Co-manager Nicholas Cooling joined him in 1999.

They run a portfolio of government and corporate bonds across the globe. They look for bonds with reasonable yields and hold a combination of longer-dated, lower-risk bonds and those that are slightly up the risk scale. The fund has almost 500 holdings of different maturities, credit ratings and currencies.

The managers believe that by holding a good spread and selecting individual bonds carefully, they can manage volatility and achieve consistent performance. Largest exposure in May 2018 was to BBB-rated bonds, at almost 40 per cent of assets. The fund yields 3.4 per cent.

HIGHLY COMMENDED FUND

Aberdeen Global Select Euro High Yield Bond

1-year return: 6.2% | 3-year return: 37.1%

The relatively specialist Aberdeen Global Select Euro High Yield Bond fund is our highly commended fund in this category, having achieved a lower Sharpe ratio score than its more diversified peer, Marlborough Global Bond. Over the past year it has done particularly well, trumping its peer group average by an impressive 10.8 per cent. Over three years it has outperformed by 21 per cent.

The fund is managed by Aberdeen Standard Investments on a team basis. Its European high-yield team aims to derive long-term total returns by investing at least two-thirds of the fund’s assets in fixed interest securities that are sub-investment grade, denominated in euro and issued by corporations or government-related bodies.

More than half of the fund’s assets of £846 million are currently in B-rated bonds, with another 30 per cent in BB-rated stock. Overall, the portfolio is producing a solid yield of 4.6 per cent. Positive growth momentum in Europe is expected to continue this year, which would provide support for high-yield companies.

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