Context: Given the combination of strong fundamentals and attractive valuation levels, our base case for the next 12 months in terms of performance of the fund is not only income but further capital appreciation too. Hence the performance guidance of 9% for the EUR fund, 10% for the USD fund and 10% for the GBP fund.
Impact for the fund:Over the next 12 months performance guidance of 9% for EUR and 10% for both
We keep seeing strong improvement of credit metrics within European financials. Moreover, the multiyear regulatory processkeep forcing financials to build up capital and strengthen their balance sheets, all of which are supportive from a credit perspective as confirmed by the latest session of results. We expect holders of financials’ subordinated debt to benefit the most from this. Furthermore, with spreads of these securities currently above 400 bps, valuations remain extremely attractive.Last but not least we see significant value in legacy capital securities of banks and insurers which offer attractive features in a portfolio context and attractive valuations.
Given all this, we feel the fund going forward has scope to benefit not only by the usual high steady income but from potential further high capital gains.
Guidance for next 12 months is 9% for Eur fund and 10% for usd/gbp fund. Of which half coming from income and remaining from price appreciation
GBP and USD