Let's discuss... corporate bonds

aroominyork

The main difference is Global IG is not constrained to Sterling issues and it is probably better characterised as a version of Man Dynamic Income with less junk.

How is Sterling Corporate Bond constrained? Its mandate is "at least 80% of its net assets in Sterling denominated bond securities issued by corporates ( or non-sterling denominated securities hedged back to Sterling or in any combination of both)." All Golan's funds are hedged to Sterling so where is the difference?

masonic

https://forums.moneysavingexpert.com/discussion/comment/82066013#Comment_82066013

If that's correct and Sterling Corporate Bond can freely hold USD and EUR bond issues as long as it hedges them back to Sterling, then the name of the fund and the "Benchmark and Degree of Freedom" section of the factsheet are a little misleading. But it looks as though the two funds are investing quite similarly, so this must be the case. In which case, why the need for two funds?

I didn't pay any attention to Sterling Corporate Bond until now because I believed it was a Sterling corporate bond fund (i.e. constrained to just 5 or so percent of the total market)!

Edit: One key difference I did find, was that Sterling Corporate Bond's top 5 holdings, if Trustnet is to be believed, are UK Gilts, making up some 25% of the fund. Whereas all the top 10 of Global IG Opps appear to be non-Sterling corporates.

aroominyork

In which case, why the need for two funds?

Based on absolutely no evidence, it's because a fund name including "investment grade" attracts additional investors. Based on absolutely no evidence.

masonic

It was the word "global" that attracted me, but given what I've just discovered about the 25% gilts in Sterling Corporate Bond, I have no regrets. I don't need that overlap. I do wonder whether that has anything to do with the average credit rating conundrum we were discussing before…

aroominyork

I cannot make sense of that since the asset class breakdown only shows corporate bonds and the factsheet shows 0.74% of AA graded bonds, though it does show 10.47% of AAA. Strange…

masonic

https://forums.moneysavingexpert.com/discussion/comment/82066095#Comment_82066095

Could be it was a short-term tactical play - Trustnet data is from the end of May.

Or maybe that's just collateral for a derivative?

aroominyork

Or maybe that's just collateral for a derivative?

Don't start! Time for a drink.