Baillie Gifford Strategic Bond A

A diversified blend of investment grade and high yield corporate bonds.

  • 87.17p
    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.

  • 223.60p
    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?

  • 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).

  • 1.05%
    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.

  • 3.50%
    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 18 September 2020, fund data last updated 01 December 2002

A blend of investment grade and high yield corporate bonds is held to produce a reasonable monthly income without eroding capital. Diversification across industry and asset class will aid to reduce the risk of a higher yield. There will be a bias toward BBB and BB issues where the manager's approach is best suited. Managed from Scotland by a reasonably sized team of analysts and managers.

Fund summary

Sector £ Strategic Bond
Structure OEIC
Launched February, 1999
Size £1,308m
Yield 3.50%
Charging basis Income
Dividends paid Last day of each month

Charges

Standard initial charge 0.00%
Initial charge via Bestinvest 0.00%
Additional bid/offer spread 0.00%
Annual management charge 1.00%
Ongoing charges figure 1.05%

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Investment process

The Fund aims to achieve a high level of monthly income whilst preserving capital. Investing in a diverse portfolio of investment grade and high yield Sterling denominated bonds. They will manage the funds to exploit the philosophy that the majority of bonds are held by passive managers and that the rating agencies are slow to change ratings. Such opportunities tend to arise more frequently in BBB and BB rated bonds. The stock selection is focused on identifying where the greatest risk adjusted return can be found. 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 0.34%
  • 16/17 0.19%
  • 17/18 0.07%
  • 18/19 0.28%
  • 19/20 -0.09%

Bestinvest MRI

  • 3 years 0.09%
  • 5 years 0.16%
  • Career 0.17%
  • 3 years 82.90%
  • 5 years 98.00%
  • Career 97.60%

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

Stephen Rodger / Torcail Stewart

Rodger graduated with a BSc (Hons) in Management Science from the University of St Andrews in 1990. He completed a Masters in Accounting and Finance from the London School of Economics in 1994. He joined Baillie Gifford in 2000 and is Head of the Credit Department. Stewart graduated with a BA in Geography from Cambridge University in 2002 and with an M.Phil in Management, Economics and International Relations from the University of St Andrews in 2005. From 2006 to 2008 he worked as an Investment Analyst for the Alliance Trust’s UK Large Cap equity fund. He joined Baillie Gifford in 2008 and is an Investment Manager in the Credit Investment Team

Track record

Stephen Rodger / Torcail Stewart 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 +0.17%. During the worst period of relative performance (from March 2011 - November 2011) there was a decline of 16% relative to the index. The worst absolute loss has been 12%. Statistically, we estimate the probability that this fund manager is adding value, rather than being lucky, is 98%.

Periods of worst performance

Absolute -12.00% (January 2020 - March 2020)
Relative -16.00% (March 2011 - November 2011)

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.

Allocation

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Top 10 holdings

Data accurate as at 31 July 2020

2.7% Netflix 4.625% 2029
2.6% Kfw 5% 2036
2.3% Nat. Grid 5.625% 2025
2% Virgin Media Secured Finance Plc 5% Bds 15/04/27 Gbp1000
1.7% Enel Finance Int 5.75% Bds 14/09/40 Gbp1400000000
1.7% Co-Operative Group 7.5% 2026
1.6% Tesco Property Finance 6 Plc 5.4111% Bds 13/07/44 Gbp100000
1.5% Crh Funding Bv 1.625% Bds 05/05/30 Eur100000
1.5% Global Switch 2.25% 2027
1.5% Softbank 5% 2028
Source: Trustnet

Sector breakdown

Utilities 14.00%
Insurance 9.00%
Technology 9.00%
Telecommunications 8.00%
Others 7.00%
Basic Industries 7.00%
Media 5.00%
Asset/Mortgage-Backed Securities 5.00%
Banks 5.00%
Services 4.00%

Portfolio

The number of companies represented in the portfolio will be in the range 40-60. The portion held in sub-investment grade bonds is generally around 30%. The average rating in the fund is investment grade.

Constraints

There is no interest rate bet versus the universe and any credit risk will be taken in shorter-dated bonds.

Key Investor Information - Income

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Key Investor Information - Accumulation

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