With the ECB having waded into the European credit markets, the game has changed for bond specialists operating in this selective field over the past few years.
So, who has best adapted and called upon their long-term outperformance to see them through?
In this analysis, Citywire Selector focuses on the two Bond – Euro Corporates managers topping the sector on a five-year total return basis.
We take a closer look at their current investment thinking to see how they have forged ahead amid rising investor interest and the changing backdrop for yield-hungry fund managers.
*Data covers the period October 2012-October 2017.
Julien de Saussure, EdRAM
Fund manager, Edmond de Rothschild Signatures Financial Bonds
Performance: Five-year total return of 45.68% with a Manager Ratio of 1.13.
Experience: De Saussure joined Edmond de Rothschild in 2006 and has managed the fund since 2011. Along with the European corporate bond fund he also manages a mixed asset strategy with Citywire + rated Pierre Nebout. De Saussure started his career as an M&A analyst at Deutsche Bank.
Citywire rating: De Saussure has been consistently rated since October 2013 with the exception of one month at the end of 2016. He started with a + rating and gradually climbed to AAA in December 2014. He held onto the top award until February 2016 when he dropped to a + rating.
Investment style: The manager has a home bias, with France making up 26.4% of his fund, followed by the UK at 13.4%. On a sectoral basis 67.1% of the fund is allocated to banking services, while insurance makes up 28.4%. He also holds 4.5% in cash. In terms of seniority, CoCos make up 47.2% of the fund while Tier 2 bonds account for 29.3%.
Jacob Topp, Nordea AM
Fund manager, Nordea 1 – European Financial Debt
Performance: Five-year total return of 63.79% with a Manager Ratio of 1.12.
Experience: Topp started his career at Denmark National Bank and spent 12 years as a professor in monetary economics at Copenhagen University. He joined Nordea in 1999 as head of credit research and has managed funds for the Nordic asset manager since 2008.
Citywire rating: Topp earned his first Citywire rating in March 2013. He held onto the A rating for three months, increasing it to AA before dropping out in September 2013. He remained unrated until April 2015, when he once again achieved an AA rating and kept it for 10 months.
Investment style: The manager has 57 holdings in the €339.67 fund and all of his top ten positions are financials. His largest country allocation is to Switzerland at 16.44%, followed by Italy, which makes up 12.73%. Net liquid assets account for 8.17% of the fund. In terms of quality, Topp prefers BBB and BB-rated credit, which make up 34.50% and 33.79% of his fund respectively.
This article originally appeared in the November edition of Citywire Selector magazine.