And the winner of the Global Bonds award is...
1-year return: 4.5%
3-year return: 19.4%
This is not the top performer among global bond funds, nor does it have the best risk-adjusted returns. In fact, its performance over three years is in the second quartile of its peer group, but the statistics were overruled in this instance with a qualitative view taken more into account, favouring its broad-based, conservative approach.
M&G Global Government Bond invests primarily in investment-grade government bonds, including government-guaranteed debt securities, which are generally perceived as lower-risk assets in times of economic uncertainty. It could prove a solid choice for fixed income investors at this late stage of the economic cycle, and it is on this basis that it wins our Best Global Bond fund award.
The £116 million fund is split across 60 issuers, both developed and emerging world. Almost one quarter of its assets is in US Treasury bills, with 10% in bonds issued by the Japanese government. Smaller allocations are to the UK, Mexico and Romania among other named countries. However, the fact that half of the fund is in bonds issued by ‘other’ governments shows how truly globally diversified it is.
Claudia Calich, with 20 years of experience in emerging market debt, runs this fund. Seasoned fixed income investor Jim Leaviss is her deputy, and the duo is flanked by an in-house team of analysts. The portfolio is positioned so that its performance should be less sensitive to the prospect of rising interest rates – a strategy known as holding short duration.
HIGHLY COMMENDED FUND
M&G cleans up in this category, taking highly commended for its M&G Emerging Markets Bond fund. It is a newcomer to our awards but has been a Rated Fund since 2016, having produced solid long-term returns from a mix of government and corporate bonds.
Claudia Calich, the fund’s manager since 2013, and her deputy Charles De Quinsonas believe that choosing the right mix between government and corporate bonds in local and ‘hard’ (foreign) currency, together with careful country and security selection, are key factors in maximising returns.
The fund’s investment process blends high conviction views on global, regional, and country-specific macroeconomic factors with in-depth analysis of the bond issuer’s creditworthiness. The result is a portfolio with 105 issuers and a yield of 5.3%.
Experience shines through in globally diverse portfolio