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Four corporate bond managers to watch

Citywire Investment Research runs the rule over the fixed income sub-sector to find a quartet of outperforming specialists.

Market Overview

Corporate bonds as an asset class has 262 managers with a rating this month. Citywire Investment Research can break this down to 24 who are AAA rated, 46 AA rated, 86 A rated and 106 who have received a Citywire + rating.

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Highest New Entrant

Fund Manager: Heinie Hakker, Kempen

Rating: AAA Rated

Overview

Heinie Hakker of Kempen is this month’s highest new entrant having achieved a AAA rating after strong three-year performance in sector. He has 36.4% over the time period compared to an average manager return of 27.3% in Corporate Bonds.

The funds contributing to his performance are the Kempen (Lux) Euro Credit Fund I, which he has managed since the July 2011, and the Kempen (Lux) Euro Sustainable Credit Fund J which he has managed since the 8th October 2013.

The Kempen (Lux) Euro Credit fund’s objective is to primarily invest in euro-denominated investment grade rating corporate debt. Investments may be made in financial instruments included in the benchmark or have a rating of at least BB- at the time of purchase.

The fund is currently overweight relative to the benchmark on energy giant EDF, which contributed positively on an individual level. The fund is overweight on AAA-rated bonds by five percentage points, while being underweight BBB-rated bonds by eight percentage points relative to the benchmark. In terms of sector, Hakker sees the greatest potential in banks with 28.4% of the portfolio allocated there.

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Comeback Star

Fund Manager: Samir Bederr, La Banque Postale Asset Management

Rating: + Rated

Overview

Samir Bederr of La Banque Postale Asset Management is on the comeback trail this month having earned a Citywire + rating for the first time since his last Citywire rating seven months ago.

On a five-year, absolute return basis, Bederr returned 37.8% compared to the average manager’s 27.3% return in the broader corporate bonds sector. This is based on his tenure at the helm of the LBPAM Obli Credit E fund, which he has managed since March 2002. The LBPAM Obli Credit E fund’s objective is to outperform the euro bond markets by benefitting from the extra compensation offered by private sector over government bonds.

At present, 20.6% of the portfolio is exposed to France showing Bederr's confidence in his home market despite geopolitical risks. This is while its second largest bet is on the US, with 17.6% of the portfolio allocated there. In terms of sector, 50% of the portfolio is allocated to financials, while 10% is invested in in non-cyclical consumer goods and 9% in telecoms. Its biggest individual bet is on Aegon, a UK based insurance agency.

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One to Watch

Fund Manager: Patrick Vogel, Schroders

Rating: AAA Rated

Overview

Bond specialist Patrick Vogel of Schroders has performed strongly throughout 2016 and started 2017 with a bang by achieving another AAA rating. He was AAA-rated in every month of 2016 bar March, when he dropped back to be AA-rated before quickly recovering.

Vogel returned 17.2% over the three years to the end of December 2016, which trumps the average manager’s 9.8% in the same analysis period. The fund contributing to his stellar performance is the Schroder ISF EURO Corporate Bond A Acc fund, which he has managed since August 2012.

This fund currently has 20% of its assets exposed to the UK, while its second largest bet is on the US, with 19% of the portfolio allocated there. In terms of sector, 48% of the fund is allocated to industrials and 34.5% is exposed to financials, with a whopping 82.5% of the portfolio dedicated to just two sectors.

This indicates his high conviction and perhaps explains his massive outperformance. His biggest individual bet is on Citigroup at 1.67% of the portfolio, showing faith in the New-York based multinational finance group.

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Rising Star

Fund Manager: Mondher Bettaieb, Vontobel AM

Rating: A rated

Overview

Rising up the ratings is Mondher Bettaieb of Vontobel Asset Management, who has improved on December's + rating to be A rated for January. Bettiaeb runs the Vontobel Fund - EUR Corporate Bond Mid Yield B fund and has done since 2010.

On this approach, the Swiss-based investor returned 36.3% over the past five years compared to the average manager’s 27.3% return in the corporate bonds sector. He achieved this by focusing on the lower investment grade segment of the European corporate universe.

At present, Bettaieb’s biggest bet is France, which makes up 17% of the portfolio, while the UK shares a similar weighting at 16.5%. Italy is just behind with 14.5% of the portfolio being exposed there, while those three countries comprise the primary geographical allocation of the fund.

At a credit quality level, 52.4% of the portfolio is invested in BBB rated bonds, 20% in BB rated bonds and 17% in A rated bonds. Its benchmark is the BofA Merrill Lynch A-BBB Euro Corporate TR EUR.

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Related Fund Managers

Patrick Vogel
Patrick Vogel
10/72 in Mixed Assets - Absolute Return EUR (Performance over 3 years) Average Total Return: 16.76%
Samir Bederr
Samir Bederr
29/174 in Bonds - Euro Corporates (Performance over 3 years) Average Total Return: 11.01%
Mondher Bettaieb
Mondher Bettaieb
22/174 in Bonds - Euro Corporates (Performance over 3 years) Average Total Return: 11.57%
Patrick Vogel
Patrick Vogel
2/174 in Bonds - Euro Corporates (Performance over 3 years) Average Total Return: 15.56%
Heinie Hakker
Heinie Hakker
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