If you see some gold corporate credit cards being flung across a City bar this winter, it may be the folks at Man GLG toasting the growth of their Sterling Corporate Bond fund which, in a period where fixed income has pretty volatile, has grown from £187mn to £644mn over the past year.
Having been launched in late 2021, it is now the joint most owned fund in the sterling corporate bond universe, having picked up five new buyers since the start of 2023.
The fund is now owned by six allocators, quite the tally for a product which has yet to achieve the much fabled three year track record.
It’s run by Jonathan Golan who previously spent a long time running money at Schroders before joining Man GLG in 2021 and launching this product.
And in performance terms it’s had a stonking run, being the absolute top performer from 98 funds in the IA Sterling Corporate Bond universe over the past year, returning 22 per cent compared with the 8 per cent average for the sector, and in 2023 it has returned 11 per cent compared with one per cent for the sector average.
The fund’s largest exposures are to Europe ex-UK corporate bonds and in particular to financial and real estate companies.
One suspects the performance here has been driven by those assets performing better than expected during a period where the collapse of SVB Bank in the US and the travails of Credit Suisse may have meant bonds across the financial sector sold off indiscriminately, before rebounding.
The other Sterling Corporate Bond fund which is owned by six allocators is Artemis Corporate Bond,which has picked up one new buyer in 2023.
The key to performance here may be that Stephen Snowden’s fund has been short duration. Snowden has had the view that rates would be cut and recession would happen, but while that would normally mean going long duration with bond exposure, Snowden stayed short duration on the basis that he didn’t want to try to time the market, and short duration proved to the be the right call for most of the past year.
Snowden’s fund is £1.3bn in size and is firmly second quartile over one and three years, and in common with Golan’s fund, has its largest exposure to financial assets, at 40 per cent of the fund.
Assets have grown from £400mn in 2020 to the present £1.3bn, though it was slightly higher earlier this year.
That short/long duration question is one that will likely dominate the return profile of various corporate bond funds in the coming year, and the performance of these two fast rising funds is certainly something we will keep an eye on.
