31 Oct 2024
Every month we study the universe of funds in the investment marketplace to assess whether they meet our exacting standards and should be given the RSMR seal of approval.
Here are the new rated funds from our October review:
The Royal London Global Bond Opportunities Fund was created because the Royal London fixed income team wanted to apply their skills to managing a truly global mandate that invests largely in credit, with a view to delivering a high level of income from a well-diversified portfolio. Having successfully run the Royal London Sterling Extra High Yield Bond fund for many years, they wanted to apply the same approach to a mandate with a wider universe, providing more investment opportunities.
We have known the highly regarded Royal London fixed income team for many years and are impressed by their expertise and the extent to which they have produced consistently strong relative returns across a wide range of mandates on a regular basis. Royal London continues to demonstrate its commitment to developing and enhancing its fixed income team and their capabilities, given its importance to the business.
The investment process is focused on fundamental research with stock selection seen as being the largest and most consistent contributor to long-term performance. Consequently, the close working relationship between the credit analysts and fund managers is a key aspect of the process.
Since inception, the fund has performed well, and it is a very credible option for investors requiring exposure to global corporate bonds.
We have been looking to extend our choices in the global bond sector to add more options to our current rated funds. Dodge & Cox have a very strong and well-resourced research team which we believe offers us the relatively unique feature of analysts that work on a stock from both an equity and bond perspective giving a holistic view of a company.
The managers aim to drive returns from regional and currency allocations as well as delivering alpha through credit selection, which historically has been the strongest element of returns. They have a style that has been consistent through a range of investment environments which gives us confidence when using the fund in combination with others that have different methodologies, as we can rely on their approach to be maintained should the macro backdrop change.
The L&G Strategic Bond fund taps into the wider fixed income platform at LGIM, drawing upon the vast resources available to the managers in determining where the opportunities lie in the asset class. Understanding the macroeconomic environment allows the team to add value by dynamically altering the top-down asset allocation based on many different factors such as politics, monetary and fiscal policy, and the strength of corporate issuers within their investible universe.
The fund is primarily invested into a diversified portfolio of corporate bonds, with the managers able to leverage the specialist teams within LGIM to seek out the most compelling ideas in areas like high yield and emerging market debt. The top-down macro views and bottom-up proprietary research on individual securities are combined within a robust risk management framework to ensure the fund generates returns from many different sources, allowing it to perform well in a variety of different economic conditions. The team have built a strong track record of performance, both in absolute terms and relative to sector peers.
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The value of investments and the income from them may go down as well as up and investors may not get back the amounts originally invested.