MUZINICH BONDYIELD ESG HEDGED GBP S

A short dated, primarily investment grade ESG corporate bond fund.

  • 10987.00p Price (Inc)
  • - Price (Acc)
  • 1.00% 0.00%

    Initial charge
  • 0.40% Annual management charge
  • 0.67% Ongoing charges
  • 2.70% Yield

Prices as at 20 February 2018 , fund data last updated 15 November 2019

The Muzinich BondYield ESG fund is a short duration bond fund that invests predominantly in investment grade corporate bonds and selective high yield issues. The fund’s investment grade holdings aid performance in challenging economic environments whilst the high yield element aids performance during economic recoveries. Muzinich’s investment philosophy is based on finding quality securities that have enhanced return potential. They seek to make thoughtful credit decisions and not market timing decisions. By focussing on fundamental credit selection and idiosyncratic ideas, performance is driven by income and makes the fund less reliant on duration bets.

Fund summary

Sector
Structure OFFSHORE FUND
Launched January, 2016
Size £203m
Yield 2.70%
Charging basis Income
Dividends paid June, December (XD)

Charges

Initial charge 1.00%
Initial charge via Bestinvest 1.00%
Additional bid/offer spread 0.00%
Annual management charge 0.40%
Ongoing charges figure 0.67%

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Investment process

The fund invests primarily in short dated investment grade corporate bonds (a minimum of 60%) with the remainder of the portfolio consisting of either high yield debt (max 40%) and loans (max 10%). The portfolio must maintain an average credit rating of at least BBB-. The manager only invests in cash bonds (no credit derivatives are used within the portfolio) and all currency risk is hedged away. Initially the manager applies a zero tolerance screen for all companies that are non-compliant with the UN Global Compact, all companies involved in the production of controversial weapons and all companies where there is evidence of child labour in their operations. The fund will not invest in a company that generates more than 5% of revenues from the following industries: Alcohol, Tobacco, Gambling, Pornography, Weapons, Nuclear, Fur and speciality leather. To Muzinich a company’s likely future free cash flow—after payment of the company’s obligations—is the single most important factor in determining credit-worthiness. In order to calculate this number every credit is modelled with analysts assessing the company’s business, market standing, debt burden, liabilities, legal or regulatory challenges, and management skill.

Muzinich is an investment house that solely focusses on credit, both public and private, and are in our opinion one of the stand-out fixed income investors in the market today. The combination of defensive investment grade and higher returning yield provides investors with meaningful returns in what is a very low yield environment whilst keeping volatility low. It is not the strictest ESG fund in the sector, but it offers clients a significantly lower duration than peers and has more of an international exposure.

Manager research

Average monthly relative returns

Bestinvest MRI

14/15 15/16 16/17 17/18 18/19 3 years 5 years Career 3 years 5 years Career
-0.18% 0.00% 0.17% -0.02% -0.03% 0.04% 0.00% 0.01% 88.70% 0.00% 82.10%

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

Tatjana Greil Castro

Greil Castro came to Muzinich from Metlife Investments, where she served as an Associate Director of the High Return Unit. Earlier, she worked as Senior Portfolio Manager in European High Yield for Fortis Investments and as a portfolio manager and credit analyst at Legal & General Investment Management. She has a Ph.D. from the London School of Economics, a Masters from the Kiel Institute of World Economics in Germany, and an M.Sc./B.S. in Economics from the University of Vienna.

Track record

Tatjana Greil Castro has 9.7 years experience of managing mutual funds in this sector. Over this period the average monthly return relative to the benchmark index has been +0.01%. During the worst period of relative performance (from November 2010 - February 2016) there was a decline of 5% relative to the index. The worst absolute loss has been 3%. Statistically, we estimate the probability that this fund manager is adding value, rather than being lucky, is 82%.

Periods of worst performance

Absolute -3.00% (May 2011 - September 2011)
Relative -5.00% (November 2010 - February 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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Portfolio

Approx 80- 120 issuers. Predominantly US and European domiciled issuers.

Constraints

Portfolio duration 3-5 yrs. Min average credit quality BBB-. Max single issuer exposure: 3%.

Key Investor Documents

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