Credit/bond opportunities funds
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Exactly, and it's because I find bond funds more difficult than equity funds to assess that I previously started this thread (to which you were the final poster) and also this one looking at risk ratings. I am linking to them here in case they are of use to others.You have to decide what role bonds are playing in your portfolio. If their role is to reduce volatility, then you shouldn’t go chasing returns from bond funds, the more you do that, the more you will get correlation with equities and increased volatility, defeating your original purpose. If you are trying to maximise return from bonds regardless of risk or volatility, then it makes sense to chase returns but you need to be doing it with your eyes open.0 -
aroominyork wrote: »Exactly, and it's because I find bond funds more difficult than equity funds to assess that I previously started this thread (to which you were the final poster) and also this one looking at risk ratings. I am linking to them here in case they are of use to others.
I think it’s less difficult if you’re clear about the role of bonds in your portfolio. If you are using bonds to reduce volatility, then you can reject quite a few bond funds, including funds that invest at least 80% of their assets in below investment grade securities. If you want to reduce volatility you should be looking at investment grade bonds. You should also be avoiding funds that short bonds, as that has the potential to amplify volatility. If you want to take more risk, you’re probably better off increasing your asset allocation to shares rather than chasing return from bonds.0 -
I mentioned that I hold Sanlam, but its factsheet does not give a breakdown of asset classes or maturities so I wrote to Sanlam asking to be shown where I can access them and I was sent a couple of diagrams which I cannot work out how to attach (without going over the character limit). One shows, for the three asset types of investment grade credit, government and high yield, the portfolio weight range (eg 0-20% for high yield), yield range, risk level (low/medium/high), duration range (eg 0-10 years for investment grade) and average credit rating (eg A to BBB), and the other is a pie chart showing the relative proportion of credit ratings for the three asset types.
This is general info about the range within which the fund operates but does not give the kind of information most funds provide on a rolling basis. Trustnet says "The Asset Class Breakdown data is not currently available for this fund." What should I read into this apparent opaqueness?0 -
aroominyork wrote: »I mentioned that I hold Sanlam, but its factsheet does not give a breakdown of asset classes or maturities so I wrote to Sanlam asking to be shown where I can access them and I was sent a couple of diagrams which I cannot work out how to attach (without going over the character limit). One shows, for the three asset types of investment grade credit, government and high yield, the portfolio weight range (eg 0-20% for high yield), yield range, risk level (low/medium/high), duration range (eg 0-10 years for investment grade) and average credit rating (eg A to BBB), and the other is a pie chart showing the relative proportion of credit ratings for the three asset types.
This is general info about the range within which the fund operates but does not give the kind of information most funds provide on a rolling basis. Trustnet says "The Asset Class Breakdown data is not currently available for this fund." What should I read into this apparent opaqueness?
That you can't get the detail of what you are investing in.
If you aren't happy with trusting the manner then move your investment into another fund.0 -
The fact they don't give the info on the further that trustnet uses to draw comparable charts for other funds just gives you a harder job if you wanted an easy comparison. But if they don't produce the information in that format because that's not the way they manage the fund, it doesn't necessarily bar you from getting involved.aroominyork wrote: »This is general info about the range within which the fund operates but does not give the kind of information most funds provide on a rolling basis. Trustnet says "The Asset Class Breakdown data is not currently available for this fund." What should I read into this apparent opaqueness?
A few bits copy pasted from their site:Total return focus
The Fund’s objective is to provide an attractive total return for investors, through a high monthly income and capital growth potential.
The Fund is not constrained in its bond investments by any reference benchmark or peer group.
Value driven credit approach
Core investments are in undervalued corporate bonds held for the long term, in primarily the investment grade/crossover area.
Our focus is particularly on attractively priced bonds, sourced from a broad global opportunity set, that can deliver both a relatively high income and comply with our low tolerance for credit risk.
Willing to hold bonds to maturity or until full value realised through a particular event that may have the potential for also providing capital gains.
Active macro overlay
Core portfolio investments are supplemented with active investment in liquid government bonds on a currency hedged and unhedged basis.
This dynamic overlay strategy regularly adjusts the portfolio’s duration and currency exposures in seeking to enhance portfolio total returns.
There's more, but no point regurgitating their site on this site.
In the context of the above descriptions about core strategy, regular adjustment of duration and currency, investing with an unconstrained remit -which could change on a weekly basis - and the fact they have already given you info about asset group weightings, yield ranges, duration ranges, credit rating ranges (core being investment grade/crossover)... you have to wonder what is it that you actually NEED to make a decision.
You are a self confessed complete novice in the bond markets, as are most retail investors. If they gave you a full listing of every holding they have this week: would you pore over it and see it didn't have any Nestle 2027 4 2% Euro-denominated bonds, and then you immediately think "ah ok if I buy this I might need to make sure I top up my EUR exposure to Swiss headquartered businesses in the consumer goods segment by also holding a different bond fund which has doubled up in that area"?
If so, there's no point using a managed strategic fund if you are going to to try to manage what it holds. If you second guess what they are doing next and do the opposite yourself via other holdings to give you some 'balance' there is no point paying them to implement their best ideas. Whereas if you are happy to let them do their thing because of them being more expert than you - you don't need the information to be articulated in an incredibly detailed way on the factsheet.
As bigadaj says, if you're not comfortable, look elsewhere.
I must admit whenever I go to a fund manager's website I always check the cookie option to say I'm a professional client, intermediary or adviser. I don't want to only be offered the "rookie level" Retail Client marketing as I do like to think I know what it is I'm reading.
For someone who is less clear on this sort of stuff, OEIC literature has historically been written in quite basic terms with whatever parameters are suggested by regulator; because historically it was marketed through IFAs, platforms and other types of intermediaries or advisers. A KIID is just as useful as a Prospectus to many investors who find a prospectus daunting...but for me a KIID is the high level basic stuff and often pretty useless.
As they say - a little knowledge is dangerous anyway
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The fund operates in a range of investment grade credit 70-85%, gilts 15-30% and high yield bonds 0-20%. Obviously I should only hold this fund if I am happy for the manager to move around within this range where the most cautious would be 70% investment grade credit and 30% gilts, and the most adventurous 80% investment grade credit and 20% high yield. But the lack of data prevents me looking at historic performance or tracking future performance against other funds in the sector, or seeing whether the manager is generally being ballsy or cautious. All I know, which Sanlam mentioned alongside the graphs it sent me, is that the Fund’s duration range is between 4-10 years and is currently 10.
Of course this comes down to bagadaj’s point that it’s my call so my last question is whether it is common for funds not to publish more data about its holdings and whether its absence per se rings alarm bells for more experienced investors?0 -
aroominyork wrote: »The fund operates in a range of investment grade credit 70-85%, gilts 15-30% and high yield bonds 0-20%.
You can easily look at historic performance by looking at the performance charts against other funds that are the types of funds which might have 70-85% investment grade and 15-30% gilt and up to 20% high yield.the lack of data prevents me looking at historic performance or tracking future performance against other funds in the sector
The specific position they had among that range from day to day is not so important because they are deliberately flexible and will slide around within the parameters. As will others in the strategic bond arena.
It's not like they are saying they are 0-100% equity and 0-100% inv grade corp bond and 0-100% high yield.
However if you don't want to use the fund because the manager has not been in place for more than five years and you are uncertain how it will perform in a broader range of conditions, while other groups make you more confident as you can see how they did over a longer set of circumstances, then use those other groups.0
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