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Bond beaters: Top three global outperformers revealed

Citywire Switzerland takes a look at the top three managers in the sector over three years.

The hunt for yield is on as many bond investors have been aggressively cutting duration and increasingly moving into emerging market debt.

For the first time ever, veteran investor Richard Woolnough recently announced his move to negative duration on UK bonds in his €18 billion M&G Optimal Income fund .

Meanwhile, high-quality bonds have been one of the better performing asset classes in 2016 and EMD has seen staggering flows.

But how are managers in this highly diverse sector faring?

Let’s take a closer look at the managers who have managed to deliver outstanding returns and are outperforming their peers in the global bond universe over three years.

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The hunt for yield is on as many bond investors have been aggressively cutting duration and increasingly moving into emerging market debt.

For the first time ever, veteran investor Richard Woolnough recently announced his move to negative duration on UK bonds in his €18 billion M&G Optimal Income fund .

Meanwhile, high-quality bonds have been one of the better performing asset classes in 2016 and EMD has seen staggering flows.

But how are managers in this highly diverse sector faring?

Let’s take a closer look at the managers who have managed to deliver outstanding returns and are outperforming their peers in the global bond universe over three years.

Leave a comment!

Please sign in or register to comment. It is free to register and only takes a minute or two.

3. Ariel Bezalel , Jupiter

Fund: Jupiter JGF Dynamic Bond L CHF Q Inc H

Citywire A-rated Bezalel has recently cut duration and upped exposure to Australia with five of his top ten positions now Australian bonds.

In a recent strategy update, the manager said he is avoiding markets with negative yield such as Germany and Japan and has shortened the overall duration of the portfolio form around 6 years to 4.5 years.

With € 6.26 million assets under management, the fund’s largest single holding is a US Treasury bond, which matures in 2021 with a 2% yield.

The fund continues to hold many high-quality government bonds, as it holds roughly a third of the portfolio in Triple A-rated sovereign bonds.

Nonetheless, over half (54.5%) of the dynamic bond fund’s exposure is in corporate bonds compared to 31.1% in government bonds.

In terms of geographical allocation, the UK counts for 24.1% of the exposure and 22.2% towards Asia Pacific ex Japan.

The fund launched in May 2012 has an average credit rating of BBB and yield to maturity of 3.14.

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2. Charles Zerah , Carmignac

Fund: Carmignac Pfl Global Bond A CHF acc Hdg

Over the past three years, Charles Zerah has achieved a total return well above the average manager, positioning his fund among the sectors’ front runners.

The $5 million fund has a net currency exposure of 129.42% to the US Dollar with an average duration of 2.29, -52.54% to the Euro with a duration of 0.99 and 0.11% to Swiss Francs.

In terms of duration, 38.44% of the fund has less than a year maturity, 21.41% is between 7 and 10 years and 20.83% is over 10 years.

Looking across sectors, financials plays the largest part as the fund holds an exposure of 63.70% here.

According to the latest factsheet from July, the fund’s top single holding with a weighting of 12.73% was an allocation to the US market, which yielded 1% and matured in August 2016.

Manager on the fund since 2010, the fund is run with a 3.69 yield to maturity and an average credit rating of BBB+.

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1.Bruno Crastes , H2O Asset Management

Fund: H2O Multibonds HCHF-R

In the lead for the global bonds space is Citywire AA-rated Bruno Crastes, who has consistently outperformed his peers since July 2013.

Launched in 2011, the fund has $992.2 in assets under management as of the of June 2016.

Since February 2016, the management team has put a lot more focus on technical factors, looking at positioning and especially steering clear of crowded trades.

The fund’s largest single holding with a weighting of 20.97% is Italian bonds with a long maturity, yielding 4.75%.

The long/short fund has also benefited from its long exposure to European peripheral debt as yields on Italian, Greek, Portuguese and Spanish government bonds have been progressively converging towards core European bonds.

In turn, the fund holds long-term strategic positions as well as trades on the foreign exchange markets.

In terms of fundamentals, Crastes sees negative yields as temporary and dependent upon the Federal Reserve Bank’s decision to normalise its monetary policy.

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Related Fund Managers

Ariel Bezalel
Ariel Bezalel
16/32 in Bonds - Global Flexible (Performance over 3 years) Average Total Return: -0.24%
Charles Zerah
Charles Zerah
7/17 in Mixed Assets - Emerging Markets (Performance over 3 years) Average Total Return: 16.64%
Bruno Crastes
Bruno Crastes
2/87 in Bonds - Global (Performance over 1 year) Average Total Return: 17.74%