Baillie Gifford High Yield Bond A

Investing in sub-investment grade bonds to achieve a high level of income.

  • 126.30p
    Price (Inc)

    These are the shares in the fund that pay out an income to clients. The income is made up of the total dividends – the money a company can pay out to its investors – from the companies in the fund.

  • -
    Price (Acc)

    These are the shares in the fund that don’t pay out an income to clients. Any dividends – the money a company can pay out to its investors – are reinvested into companies in the fund. Despite no income, the shares should be worth more over time. Good incentive, eh?

  • 3.50% 0.00%

    Initial charge

    Some funds charge you when you first invest, which is aptly known as the initial charge. They’re usually between 3-5% but at Bestinvest, we usually don’t charge you a penny!

  • 1.00%
    Annual management charge

    This is how much the fund management company charges to run the fund. It’s like paying a babysitter, dog sitter or house sitter (that makes well-informed, heavily researched changes to improve your baby/dog/house when needed).

  • 1.03%
    Ongoing charges

    This stands for Ongoing Charges Figure. It’s the cost of running a fund and includes admin fees, manager fees, administration costs, etc.

  • 4.50%
    Yield

    How much the fund is currently paying out in income to investors. It’s NOT to be confused with the overall growth of a fund – a very different thing indeed. It’s also NOT a guarantee of future pay-outs, just a snapshot. This is more what it’s not than what it is…

Prices as at 28 October 2020, fund data last updated 01 December 2002

A range of mainly sub-investment grade bonds diversified over sectors, including asset-backed, and bond issuers. European bonds may be utilised, but exposure will be hedged back to Sterling. The active stockpicking approach will focus on solid cash-generative companies. Relative to peer group funds, the portfolio is generally more focused; low assets under management also enable the manager to focus more on security specific opportunities.

Fund summary

Sector £ High Yield
Structure OEIC
Launched September, 2002
Size £813m
Yield 4.50%
Charging basis Capital
Dividends paid Mar, Jun, Sep, Dec

Charges

Standard initial charge 3.50%
Initial charge via Bestinvest 0.00%
Additional bid/offer spread 0.00%
Annual management charge 1.00%
Ongoing charges figure 1.03%

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Investment process

The Fund aims to achieve a high level of income without capital errosion. Investing mainly in sub-investment grade bonds, they will hold bonds issued by a diverse range of companies to limit the risks of the asset class. They have the remit to invest in Europe for further diversity, but any exposure to the continent will be hedged back to Sterling. The stock selection is focused on identifying cash-generative companies whose bonds are trading attractively. This will be done through in house quantitative and qualitative research combined with information ratio analysis. For the bond in question, an automated credit score is produced using a rating agency methodology and the managers look to identify disparity from the current actual rating. The qualitative research involves assessment of industry, competitive position/advantage, financial strength and management attitude.

Manager research

Average monthly relative returns

  • 15/16 0.05%
  • 16/17 -0.06%
  • 17/18 0.02%
  • 18/19 0.25%
  • 19/20 -0.17%

Bestinvest MRI

  • 3 years 0.03%
  • 5 years 0.02%
  • Career -0.08%
  • 3 years 66.30%
  • 5 years 65.20%
  • Career 35.20%

Performance figures are based on the average of monthly percentage returns relative to the benchmark index.

Robert Baltzer / Donald Phillips

Baltzer graduated with a MMath from Durham University in 2001. He joined Baillie Gifford in the same year and is now an Investment Manager in the Fixed Income Team, where he specialises in corporate bonds. He is a CFA charterholder. Phillips graduated with a BA Hons from Strathclyde University in 2004 and Msc in Investment Analysis from Stirling University in 2005. He worked for Aegon Asset Management in the Fixed Income Team for three years before joining Baillie Gifford in 2008.

Track record

Robert Baltzer / Donald Phillips has 10.3 years experience of managing mutual funds in this sector. Over this period the average monthly return relative to the benchmark index has been -0.08%. During the worst period of relative performance (from September 2011 - January 2016) there was a decline of 16% relative to the index. The worst absolute loss has been 17%.

Periods of worst performance

Absolute -17.00% (December 2019 - March 2020)
Relative -16.00% (September 2011 - January 2016)

About the MRI

Our unique indicator: the Bestinvest Manager Record Index (MRI) measures the likelihood that the fund manager is adding value through their decisions. It is based on their performance record over the course of their career, adjusted for the amount of risk taken. MRI is an important contributor to our fund rating system but it is also vital to take account of qualitative factors. It is also very important to select funds to form a cohesive portfolio with an appropriate overall risk level.

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Top 10 holdings

Data accurate as at 31 July 2020

2.7% Netflix 4.625% 2029
2% Unicredit 4.875% 2024/29
2% Darling Ingredients 3.625% 2026
1.8% Co-Operative Group 7.5% 2026
1.7% Virgin Media Secured Finance Plc 5% Bds 15/04/27 Gbp1000
1.7% Leaseplan 7.375% 2024 Perp At1
1.6% Herbalife Nutrition 7.25% 2026 144a
1.6% James Hardie Intl Fin Dac 3.625% Bds 01/10/26 144 Eur100000
1.5% Allfunds 4.125% 2024 Pik
1.5% Dometic Group Ab 3% Bds 08/05/26 Eur100000
Source: Trustnet

Sector breakdown

Basic Industries 11.00%
Media 10.00%
Telecommunications 9.00%
Retail 8.00%
Financial Services 8.00%
Insurance 6.00%
Capital Goods 6.00%
Health Care 6.00%
Services 5.00%
Others 5.00%

Portfolio

Concentrated portfolio of 30-45 holdings. The managers will selectively hold BBB rated issues offering a high enough return. They will diversify further with the inclusion of asset-backed bonds.

Constraints

The overseas exposure is limited to 20% of the portfolio. There is no interest rate bet versus the universe and due to the credit risk shorter-dated bonds are favoured.

Key Investor Information

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