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Fund managers to watch in corporate bonds

Citywire Investment Research unearths a trio of sector specialists posting ratings worthy performances this month.

Market Overview

There are 171 managers who received ratings within the corporate bonds asset class this month. This is comprised of a total of 14 AAA, 32 AA, 53 A and 72 + ratings awarded to managers operating in this sector.

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Comeback Star

Comeback Star: Richard Ford, Morgan Stanley
Rating: + rated in Bonds - Euro Corporates

Overview

The comeback star for this month is Citywire + rated Richard Ford, who was last rated in May 2016. His performance in the sector is drawn from the Morgan Stanley Euro Corporate Bond A EUR fund, which he co-runs with Leon Grenyer.

Over the last five years, Ford, who is acknowledged separately from Grenyer due to running different funds active in the sector, returned 25.4%, while the average manager in the Bonds - Euro Corporates sector returned 21.2% in euro terms. The Morgan Stanley Euro Corporate Bond A EUR fund has consistently beaten its benchmark over time periods of 1, 3, 5 and 10 years.

The largest sector allocation is financials, which is overweight against the benchmark and makes up almost half of the allocations. Two notable companies in the top 10 holdings are US multinational giant Citigroup and Dutch insurance group Asr Nederland NV. In their latest report, S&P Global Ratings labelled the latter as ‘strong’ in terms of ‘Business Risk Profile’ and ‘Financial Risk Profile’.

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One to Watch

Fund Manager: Matthew Barnes, Rubrics Asset Management
Rating: AAA rated in Bonds - Global Corporates

Overview

The manager to watch this month is AAA-rated Matthew Barnes, who has been consistently rated by Citywire over the last 30 consecutive months. Barnes returned 12.1% over the past three years, while the average manager in Bonds - Global Corporates sector returned 2.5% in US dollar terms. The contributor to his performance in the sector was the Rubrics Global Credit UCITS D USD fund.

Barnes’ largest sector investments are banks and insurance, which account for 41.6% of the portfolio. Barnes has two of his ‘favourite corporate credits’ in the telecom sector, which are US multinational conglomerates Verizon Communications and AT&T Inc. Barnes’ positive sentiment is reflected by his additional investments at various maturities for both companies in March.

Last week, AT&T Inc. announced the purchase of Straight Path Communications for $1.25 billion. Moody’s, who views this acquisition as positive, commented on the fact that this gives them ‘access to key infrastructure elements to pursue 5G wireless capabilities’ which is the next logical phase in mobile telecommunications technology.

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Rising Star

Fund Manager: Alexis Renault, Oddo Meriten AM
Rating: AA-rated in Bonds - Euro Corporates Short Term

Overview

Moving up the ratings this month is Alexis Renault, who has risen from a Citywire A rating to AA-rated this month. His performance is drawn from the Oddo Compass Euro Credit Short Duration DP-EUR fund, which has been under his management since inception in June 2011. The five-year numbers have seen Renault return 16.7%, while the average manager in the Bonds - Euro Corporates Short Term sector returned 10.2% in euro terms over the same time period.

The 178-holdings fund is mainly positioned in the United Kingdom which accounts for 16.1% of the funds’ investments just ahead of Germany and France, which are joint second with 13.2% of the allocations. The largest portfolio position is Italian multinational auto maker Fiat Chrysler Europe, which makes up 4.15% of the fund bets.

In March, Moody’s affirmed the Ba3 corporate family rating and changed the company’s outlook from stable to positive. Their offer of a more favourable product mix combined with greater efficiency in purchasing and manufacturing were some factors that contributed to the outlook change.

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Related Fund Managers

Alexis Renault
Alexis Renault
1/21 in Bonds - Euro Corporates Short Term (Performance over 3 years) Average Total Return: 6.49%
Matthew Barnes
Matthew Barnes
14/84 in Bonds - Global Corporates (Performance over 3 years) Average Total Return: 13.68%
Richard Ford
Richard Ford
28/181 in Bonds - Euro Corporates (Performance over 3 years) Average Total Return: 8.86%
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