Citywire - For Professional Investors

Register to get unlimited access to Citywire’s fund manager database. Registration is free and only takes a minute.

EdRAM crossover bonds strategy takes HY close to upper limit

EdRAM crossover bonds strategy takes HY close to upper limit

Fund manager Mark Kowalski from Edmond de Rothschild Asset Management has increased his exposure to high yield bonds, taking his postion close to its maximum capacity.

The current allocation to the asset class in his Edmond de Rothschild Fund – GI Crossover Bonds fund is 39% against the limit of 40%.

Kowalski is betting on the ECB's bond purchasing program and achieves his high yield exposure using a crossover strategy.

He added that there was more issuance of BBB and BB rated bonds in Europe in the beginning of the year.

‘We still have a conviction in corporate bonds and prefer credit risk over duration risk at the moment. The technical as well as fundamental data remains stable in the high yield sector,’ Kowalski said.

Crossover strategy for lower volatility

‘The core of our portfolio consists of investment grade BBB and high yield BB corporate bonds,’ said Kowalski.

The crossover strategy reduces volatility of the fund as investment grade and high yield often move in opposite directions over the same timeframe. Kowalski finds both asset classes very attractive at the moment. 

‘The main risk in the European high yield bond space would be an abrupt and unexpected change of the ECB monetary policy. For that to happen the inflation rate of the eurozone should be substantially higher than market expectations.’

According to the factsheet from April 2017 the top three positions in the fund are General Motors (1.9%), Credit Suisse Group (1.8%) and UBS Group (1.8%).

The global crossover bond fund is managed by Kowalski together with Raphael Chemla. Both fund managers rely on the analysis of the six-strong team.

Edmond de Rothschild Fund – GI Crossover Bonds has returned 2.23% in Swiss franc terms to the end of May over the last year. Its Citywire-assigned benchmark, Citi WGBI TR EUR, lost 3.13% over the same timeframe.  

Leave a comment!

Please sign in or register to comment. It is free to register and only takes a minute or two.
Events
  • Citywire DACH 2017

    Citywire DACH 2017

  • Citywire Switzerland 2017

    Citywire Switzerland 2017

  • Citywire Zurich Alt Ucits 2017

    Citywire Zurich Alt Ucits 2017

  • Citywire Zurich Alt Ucits 2017

    Citywire Zurich Alt Ucits 2017

  • Citywire Zurich Alt Ucits 2017

    Citywire Zurich Alt Ucits 2017

  • Citywire Montreux 2017

    Citywire Montreux 2017

  • Citywire Montreux 2016

    Citywire Montreux 2016

  • Citywire Montreux 2016

    Citywire Montreux 2016

  • Citywire Zurich 2016

    Citywire Zurich 2016

  • Citywire Zurich 2016

    Citywire Zurich 2016

  • Citywire Zurich 2016

    Citywire Zurich 2016

  • Citywire Switzerland 2015, Gstaad

    Citywire Switzerland 2015, Gstaad

  • Zurich Forum 2015

    Zurich Forum 2015

  • Zurich Forum 2015

    Zurich Forum 2015

  • Geneva Roundtable 2015

    Geneva Roundtable 2015

  • Geneva Forum 2015

    Geneva Forum 2015

  • Geneva Forum 2015

    Geneva Forum 2015

  • Citywire Gstaad 2014

    Citywire Gstaad 2014