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Revealed: newly-rated names in corporate bonds

Citywire Investment Research runs the rule over the managers making their mark in credit.

Market Overview

There are 210 managers that have received ratings within the Corporate Bonds asset class this month, in which a total of 15 AAA, 34 AA, 55 A and 106 + ratings were awarded.

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Highest New Entrant

Fund manager: Jérôme Collet, LOIM

Rating: + rated in Bonds - Euro Corporates

Overview

Jérôme Collet enters our ratings as one of the highest new entrants in the corporate bonds asset class with a Citywire + rating. Over the last three years, Collet returned 7.0%, while the average manager in the Bonds – Euro Corporates sector returned 7% in euro terms.

The funds contributing to his positive risk-adjusted performance in the sector are the LO Funds - Euro BBB-BB Fundamental (EUR) NA and LO Funds - Euro Credit Bond S A funds. These have been under his management since October 2014 and both are co-managed by Yannik Zufferey and Ashton Parker.

Through his beta allocation based on LOIM’s fundamentally weighted methodology, Collet finds most opportunities in industrials, which account for 73% of the allocations. This is followed by financials, which makes up 17.9% of the fund’s investments. The sector allocations are highly diversified among 562 positions with an average rating of BBB and modified maturity of 5.18 years. The fund has outperformed the index during the periods of 3 months, 1 year, 3 years and 5 years.

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Comeback Star

Fund manager: Gianluca Ferretti, Anima

Rating: + rated in Bonds - Euro Corporates

Overview

The comeback star for this month is Citywire + rated Gianluca Ferretti, who was last rated 15 months ago back in June 2016. His performance in the sector is drawn from the Anima Fix Imprese A and Anima Obbligazionario Corporate A funds.

Over the last five years Ferretti returned 25.4% against an average manager return of 18.8% in the Bonds - Euro Corporates sector over the same time period. The Anima Obbligazionario Corporate A fund is highly invested in financials, which accounts for 43.4% of exposure compared with a 29.2% index weight.

The manager’s largest company bet is Italian global banking and financial services company UniCredit (6.95% 10/31/22) which makes up 1.6% of the allocation. The second largest investment is Dutch multinational banking financial services Rabobank, which makes up 1.5% of the allocations.

In June 2017, Moody’s highlighted some of the bank’s credit strengths which including its leading market positions in the Netherlands and the bank’s ample liquidity reserves and an extended term structure of funding.

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One to Watch

Fund manager: Mikael Lundström, Evli

Rating: AA-rated in Bonds - Euro Corporates

Overview

The manager to watch this month is AA-rated Mikael Lundström, who has been regularly rated by Citywire since January 2015. Lundström has returned 64.4% over the past 10 years, while the average manager in Bonds – Euro Corporates sector returned 44.1% in euro terms. The , contributor to his performance in the sector was the Evli Corporate Bond B fund.

The manager’s largest sector bet is banks, which account for 21.82% of the portfolio and is followed by basic industries at 10.53% of the fund’s allocations. His largest holding is the Dutch bank group ABN AMRO Bank (1.97%). Among the bank’s credit strengths highlighted by Moody’s is its strong position in the domestic market and selected countries, as well as a high risk-weighted capitalisation. Other significant bets include Finnish power grid company Caruna (1.61%) and Danish Facility Services company ISS A/S at 1.34% of the fund’s investments.

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Rising Star

Fund manager: Lyndon Man, Invesco

Rating: AA-rated in Bonds - Global Corporates

Overview

Moving up the ratings this month is Lyndon Man, who has regained his AA rating this month. His performance in the sector is drawn from the Invesco Global Inv Grade Corp Bd A Ann Dist USD fund, which has been under his management since August 2013. Luke Greenwood also manages the fund with him.

The three-year numbers have seen Man return 16.6%, while the average manager in the Bonds - Global Corporates sector returned 7.4% in US dollar terms over the same time period. Man is currently positioned 8 out of 84 managers based on total return in the sector.

The investment process of the Invesco Global Inv Grade Corp Bond fund was developed to invest through the investment cycle to achieve their economic objectives in all economic environments. Man and Greenwood currently find most opportunities in the US, which accounts for 27.3% of the investments.

In terms of sector, financial is leading with 41.2% of the allocations, closely followed by industrials at 38.1% of the portfolio. Looking ahead, the managers expect continued growth in US and Europe while they see headwinds to Chinese growth in view of the restriction of financial conditions. The fund currently has an 8.2% exposure to the Chinese market.

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Related Fund Managers

Lyndon Man
Lyndon Man
25/82 in Bonds - Global Corporates (Performance over 3 years) Average Total Return: 10.99%
Mikael Lundström
Mikael Lundström
17/179 in Bonds - Euro Corporates (Performance over 3 years) Average Total Return: 8.88%
Jérôme Collet
Jérôme Collet
123/179 in Bonds - Euro Corporates (Performance over 3 years) Average Total Return: 3.56%
Gianluca Ferretti
Gianluca Ferretti
35/179 in Bonds - Euro Corporates (Performance over 3 years) Average Total Return: 7.09%
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