At a recent Citywire Selector roundtable, one fund selector admitted to having been ‘burned’ by absolute return bond funds, which had failed to provide return or offer up interesting and reliable ideas as yield opportunities shrank.
This general malaise has found its way into the absolute return bond market, with data for September 2017 showing that Bonds - Absolute Return EUR experienced the biggest single-month outflows out of all the sectors covered by Citywire.
So how have fund managers operating in this specialist sector fared? In this analysis we take a closer look at the ‘go anywhere’ fixed income investors to see who has turned a tough time to their advantage and risen up the rankings.
Comparing year-on-year performance, this showcases the managers with the biggest improvement in performance over the past 12 months.
Mark Dowding, BlueBay AM
Ranking period one (October 2015-October 2016): 54/59
Ranking period two (October 2016-October 2017): 15/54
Citywire AAA-rated Mark Dowding faced a tough time on BlueBay’s flagship absolute approach last year, seeing substantial outflows from the fund over the course of 2016. As the assets were withdrawn, the fund dropped towards the bottom end of the sector rankings.
However, over the past year it has undergone a considerable turnaround, with Dowding rising to the top quartile. Amid the turnaround came a change in the portfolio management of the fund, which saw Dowding retain his place, but saw Andrzej Skiba and Vinit Patel replace Raphael Robelin and Geraud Charpin as co-leads.
Gerhard Kratochwil, ConvertInvest
Ranking period one (October 2015-October 2016): 51/59
Ranking period two (October 2016-October 2017): 10/54
Also rising from near the bottom of the peer group to the top 10 is Gerhard Kratochwil, who has run the Austria-domiciled CONVERTINVEST European Convertible & Bond Fund R A since its launch. On a two-year basis, he trails the average manager by 1.3 percentage points, but he is up by 2.18 on a one-year basis to the end of October 2017.
With a focus on the convertible part of the absolute return market, Kratochwil has seen recent improvements driven by equity markets moving upwards and positive developments in converts as a whole. The management line-up has been freshened up in recent months, with Horst Simburger and Stefan Steinberger replacing Nils Lesser and Paul Hoffmann as co-managers to Kratochwil.
*This article was amended on November 30 to remove the BSF Americas Diversified Equity Absolute Return fund, which is being reclassified.