The RSMR monthly fund update - the new recruits from our April review

Allianz Strategic Bond

This fund has a flexible, unconstrained process that combines top down macro and fundamental analysis of the structural and cyclical factors driving fixed income markets to search for opportunities.

The managers, Mike Riddell and Kacper Brzezniak, have two main aims; to outperform the Bloomberg Barclay’s Global Aggregate Index over a 3-4 year investment horizon, and secondly for the fund to act as a portfolio diversifier targeting a maximum of +0.4 correlation with the MSCI World Equity Index. As a result there will be less of a weight to high yield debt compared to the sector average.

Riddell and Brzezniak carry out analysis between rates, credit, inflation and FX, looking at what is priced in. They seek to identify turning points by focusing on growth, inflation, monetary policy developments, prevailing financial conditions, political trends and the risk appetite of investors and find alpha from four main sources: duration and curve, credit, inflation and currencies.  

The differentiator for this fund is that it is managed with a macro approach with credit exposure typically taken by derivatives or options and as a result the fund has performed well since launch and, given its low correlation to equities, can be used as a core fund.