PERFORMANCE 

The fund increased by 0.8% over the quarter (USD Inst), versus the Barclays USD Aggregate Corporate Total Return Index, which decreased by 4.6%.

Performance of the fund for the period

There are two important sources of return for the fund. The first, which is significant and always positive, is the income from the underlying bonds. The current yield to maturity of the fund is 3.4%. We received 1.0% in accrued income during the period. The second component of return for the fund is realised / unrealised capital gains or losses. In general, as the fund follows a fundamental buy and hold strategy, this component is largely the result of prices being marked up and down.

Performance contributors

The aggregate positive contribution of the top 10 contributors was approximately 0.6%. A combination of different types of securities, such as additional tier one (AT1) contingent convertibles (CoCos) and legacy bonds were the top performers. We feel that there is more significant upside among these securities as spreads remain significantly wider than pre-Covid-19.

Performance detractors

The aggregate negative contribution of the bottom 10 detractors was approximately -0.3%. We have seen small pockets of underperformance during the quarter, notably among securities with slightly more interest rate sensitivity.

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