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The managers making waves in European bonds this month

Citywire Investment Research uncovers a quartet of ratings-worthy fixed income specialists.

Market Overview

There are 171 managers who have received ratings within the European bonds asset class this month. From within this elite group a total of 5 AAA rated, 27 AA, 39 A and 100 + ratings were awarded.

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Highest New Entrant

Fund Manager: Eckhard Schulte, MainSky Asset Management AG

Rating: + rated in Bonds – EuroZone

Overview

Dr. Eckhard Schulte entered our ratings as one of the highest new entrants in the asset class this month, having earned a Citywire + rating for his risk-adjusted returns. Over the last three years, Schulte returned 9.5%, while the average manager in the Bonds – EuroZone sector returned 7% in euro terms. Schulte runs the Bond Opportunities Fund D fund and has been lead manager since October 2012.

Through his top-down investment approach, Schulte is currently finding most opportunities in corporate bonds, which account for 57.7% of the fund’s allocations. Within the corporate sphere, the largest allocation is a Ba3 issue from Spanish banking group Banco Sabadell, which makes up 5.63% of exposure. The bank is headquartered in Sabadell (Spain) and has a network of 2,873 branches specialized in serving SMEs.

International group of laboratories Eurofins Scientific is another considerable bet at present, with a 2023 bond accounting for 3.48% of the fund’s allocations. The Luxembourg-based company focuses on a range of testing and support services to various industries including food and pharmaceutical. The average rating of the fund is BBB+.

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Comeback Star

Fund Manager: John Taylor, Alliance Bernstein

Rating: + rated in Bonds - Europe

Overview

The comeback star this month is Citywire + rated John Taylor, who was last rated 14 months ago in June 2016. His performance in the sector is drawn from the €1.9 billion AB FCP I-European Income Portfolio A EUR fund, which has been managed by him since May 2013. The fund is also managed by Scott DiMaggio and Jorgen Kjaersgaard. These managers are not featured here due to their separate track records producing different ratings performances.

Through the team’s credit analysis they find opportunities in a mix of investment grade and non-investment grade securities. The fund is diversified across 234 holdings with an average credit quality of BBB while the average duration sits at 3.97 years.

The manager’s largest bet is a French government bond, which accounts for 5.65% of exposure. The French economy has seen slight improvements in the second quarter of the year with the fall of unemployment by 0.1% and the economic growth of 0.5%.

The second largest allocation is a 10-year German bund, which accounts for 5.65% of the allocations. Despite two government bonds being in the top holdings, the team has corporates as the largest sector allocation with 63.35% of the funds’ investments placed here.

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One to Watch

Fund Manager: Dirk Frikkee, NN Investment Partners

Rating: AA rated in Bonds - Euro

Overview

The manager to watch this month is AA-rated Dirk Frikkee, who has been consistently rated by Citywire since April 2016. Frikkee returned 22.4% over the past five years, while the average manager in Bonds – Euro sector delivered a return of 18% in euro terms. The contributor to his performance in the sector was the NN (L) Euro Covered Bonds I Cap EUR fund, which is also managed by Stanislava Prokopova.

The managers’ largest regional investment is France which accounts for 20.1% of the portfolio and is closely followed by Spain which makes up 17% of the fund’s bets. The manager focuses on high quality secured debts issued by credit institutions and backed by a pool of collateral.

The two largest bets are the Dutch retail, private and corporate banking Abn Amro Bank, which accounts for 1.47% allocations and Portuguese private bank Banco Comercial Portugues S.A., which accounts for 1.44% of investments. The fund is also heavily invested in mortgage-backed assets which makes up 86.46% of the fund’s portfolio.

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Rising Star

Fund Manager: Cyril Renaudin, MCA Finance

Rating: A-rated in Bonds - Euro Short Term

Overview

Moving up the ratings this month is Cyril Renaudin, who has risen from a Citywire + rating to be A rated this month. His performance is drawn from the MCA Gestobli fund, which has been under his management since January 2008. Over five years, Renaudin returned 17.6%, while the average manager in the Bonds - Euro Short Term sector returned 7% in euro terms over the same time period. Renaudin is currently positioned 12 out of 106 managers in the sector.

Currently, high yield issues accounts for 49.4% of the allocations followed by investment grade, which makes up 38.8% of the fund’s bets, while bonds with no rating account for 11.8%. The fund’s largest position is automotive financing specialist RCI Banque, with 3.29% of the fund’s portfolio allocated here. The company’s first half results has seen new 882,626 new financing contracts, a 14.6% increase compared to 2016, and a pre-tax income of €540 million, up 25.3%.

Luxembourg-based multinational steel and mining company ArcelorMittal is the second largest holding at 3.14%, which has a short-term credit rating of B with a stable outlook. Meanwhile, Italian banking group Intesa Sanpaolo is the third largest, with 2.81% of the fund’s holdings.

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Related Fund Managers

Eckhard Schulte
Eckhard Schulte
16/115 in Bonds - EuroZone (Performance over 3 years) Average Total Return: 7.29%
John Taylor
John Taylor
9/74 in Bonds - Europe (Performance over 3 years) Average Total Return: 11.37%
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