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Sterling Corporate Bonds

It’s been a remarkable 6 months in corporate bond markets. Following two pain-killing liquidity injections (LTRO) from the European Central Bank the patient duly responded. The rally in risk assets embraced corporate bonds. Even in May, when the FTSE 100 fell sharply, bond markets proved resilient. But it is not a time to drop your guard. The background is uncertain for bond funds, particularly for those with weighty holdings in bonds issued by banks. 

Banks still need to deleverage, and reforms aimed at solving the eurozone debt crisis could leave bank bond holders exposed. As a result of LTRO, banks have swapped capital for risky sovereign debt leaving sovereigns and banks throughout the eurozone in a deadly embrace. Coupled with the general fragility of the eurozone, a banking crisis is never far away.  Funds with a high exposure to bank bonds such as Invesco Perpetual Corporate Bond (38% in bank bonds) have rallied strongly but now look exposed.

The underlying sub plot for 2012 remains the same as that of 2011 – low growth, low pay settlements, high unemployment, and periodic flights to safety to the benefit of high quality bonds (M&G Corporate Bond, Fidelity Moneybuilder Income and Henderson Sterling). Whether and when to buy funds more focussed on financials or high yield remains a tactical one, but on balance we feel we are not there yet, on the contrary.

The Ignis fund stands out for its performance over the last six months despite one of the lowest bank bond exposures.

 

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Growth (%)
1 Month 6 Month 1 Year Monthly risk
Fund name Value Rank Value Rank Value Rank Value Rank
Aberdeen Charity Select UK Bond in GB 0.75 55 3.55 92 6.38 92 1.54 36
Aberdeen Corporate Bond in GB 0.58 80 9.55 23 14.67 24 1.85 50
Alliance Trust Monthly Income Bond in GB 0.86 34 13.54 1 19.3 2 1.44 29
Allianz UK Corporate Bond TR in GB 0.75 53 8.18 57 13.79 43 2.07 65
Aviva Inv Corporate Bond TR in GB 0.98 18 8.97 42 14.02 37 1.68 42
Aviva Inv Monthly Income Plus TR in GB 0.74 56 10.03 14 16.22 9 1.4 25
Aviva Inv Sustainable Future Corporate Bond TR in GB 1.05 11 9.86 19 15.77 12 1.42 26
AXA Sterling Corporate Bond in GB 0.8 42 9.13 37 14.09 34 1.85 49
AXA Sterling Credit Short Duration Bond in GB 0.19 97 3.47 93 6.35 93 0.38 1
AXA Sterling Long Corporate Bond in GB 1.26 4 9.49 24 13.89 42 3.65 84
Baillie Gifford Investment Grade Bond TR in GB 0.7 60 9.07 41 13.38 50 7.75 95
Baillie Gifford Investment Grade Long Bond TR in GB 0.98 16 10.24 12 16.51 5 4.33 87
BAM Corporate Bond TR in GB 0.64 69 7.15 76 10.72 81 2.22 71
Barclays Sterling Corporate Bond in GB 0.48 87 8.22 56 12.63 60 1.89 56
BlackRock CIF Corporate Bond 1 to 10 Year in GB 0.6 75 8.86 46 14.45 27 0.98 5
BlackRock CIF Corporate Bond Tracker in GB 0.84 37 8.29 54 13.18 52 1.81 45
BlackRock Corporate Bond in GB 0.84 36 10 15 16.51 6 2.12 69
Cazenove UK Corporate Bond TR in GB 0.71 58 6.62 79 11.43 71 2.46 75
CBF Church of England Fixed Interest Securities in GB 0.36 92 4.36 90 7.84 88 0 0
CF Canlife Corporate Bond TR in GB 0.63 71 7.57 67 11.58 70 5.83 91
CF Walker Crips Corporate Bond in GB 0.91 30 6.93 77 10.95 77 1.19 11
CIS Corporate Bond Income TR in GB 1.16 8 9.42 26 12.66 58 1.89 55
Cler Med Income TR in GB 0.76 52 7.65 64 12.09 65 2.05 64
Close Bond Income Portfolio in GB 0.53 83 5.1 84 8.84 85 1.09 8
Coutts Sterling Bond Prog TR in GB 0.94 27 1.37 97 2.94 97 3.11 80
Epworth Affirmative Corporate Bond TR in GB 0.53 84 7.27 70 11.97 68 0 0
Epworth Affirmative Fixed Interest TR in GB 0.67 66 2.66 95 6.21 94 0 0
F&C Corporate Bond TR in GB 0.94 28 9.36 28 15.08 19 1.46 30
F&C Ethical Bond TR in GB 0.96 22 8.27 55 12.35 61 2.03 62
F&C Institutional All Stocks Corporate Bond in GB 0 0 0 0 0 0 0 0
Fidelity Institutional MoneyBuilder Income Reduced Duration in GB 0 99 0 99 0 0 0 0
Fidelity Institutional UK Aggregate Bond in GB 0.77 48 5.99 82 10.99 76 1.86 53
Fidelity Institutional UK Corporate Bond TR in GB 0.6 74 8.52 51 14.03 36 1.51 33
Fidelity Institutional UK Long Corporate Bond TR in GB 0.86 33 10.41 9 16.3 8 2.48 76
Fidelity Moneybuilder Income TR in GB 0.57 81 7.18 74 10.74 80 1.39 23
Halifax Corporate Bond TR in GB 0.58 79 7.65 63 12.09 64 1.25 14
Henderson All Stocks Credit TR in GB 1.23 5 7.25 72 11.41 72 1.84 47
Henderson Inst Long Dated Credit TR in GB 0.97 20 8.6 49 12.65 59 3.63 83
Henderson Sterling Bond in GB 0.75 54 7.81 62 13.13 53 4.56 88
HSBC Corporate Bond in GB 0.87 32 8.95 44 13.73 44 1.84 48
IFDS Brown Shipley Sterling Bond TR in GB 0.78 47 10.82 6 14.26 30 1.44 28
Ignis Corporate Bond TR in GB 0.76 51 11.21 5 17.89 3 7.18 93
Insight Investment Sterling Corporate Bond in GB 1 15 10.77 8 15.83 11 5.45 90
Insight UK Broad Market Bond in GB 1.18 6 6.57 80 10.88 78 4.25 86
Insight UK Corporate All Maturity in GB 0.38 91 9.4 27 14.83 22 4.79 89
Insight UK Corporate Long Maturities Bond in GB 2.84 1 10.8 7 16.5 7 6 92
Invesco Perp Corporate Bond in GB 0.81 40 11.5 4 17.89 4 1.09 9
JPM Bond For Charities TR in GB 0.79 43 5.04 85 8.8 86 2.82 78
JPM Sterling Corporate Bond in GB 0.56 82 7.9 61 12.93 54 2.13 70
Jupiter Corporate Bond TR in GB 0.59 78 6.77 78 11.2 75 1.35 20
Kames Ethical Corporate Bond in GB 0.95 23 7.27 71 11.26 74 1.33 18
Kames Investment Grade Bond in GB 0.87 31 9.75 20 15.98 10 1.43 27
Kames Sterling Corporate Bond in GB 1.06 10 9.15 36 14.36 29 1.53 35
L&G Fixed Interest TR in GB 0.69 62 8.63 47 14.66 25 1.9 57
L&G Managed Monthly Income in GB 0.59 77 9.16 34 15.63 14 1.65 41
L&G Sterling Corporate Bond Index in GB 0.82 38 0 0 0 0 0 0
L&G Sterling Income in GB 0.67 65 9.55 22 12.84 56 1.5 32
Legg Mason Global Blue Chip Bond TR in GB -0.03 100 3.72 91 6.72 91 1.31 17
M&G Charibond in GB 0.7 61 4.81 88 8.76 87 1.91 59
M&G Corporate Bond TR in GB 0.61 72 6.23 81 10.84 79 2.26 74
M&G Short Dated Corporate Bond TR in GB 0.12 98 2 96 3.33 96 1.21 12
M&G Strategic Corporate Bond in GB 0.39 90 7.22 73 12.15 62 1.29 16
Marlborough Bond Income TR in GB 0.24 95 7.44 68 12.08 66 1.55 37
Morgan Stanley Sterling Corporate Bond in GB 0.95 25 12.23 2 19.75 1 1.81 46
Natwest Extra Income TR in GB 0.79 44 8.45 52 13.64 45 1.9 58
Newton Corporate Bond TR in GB 0.81 39 8.08 58 13.36 51 1.36 22
Newton Long Corporate Bond in GB 1.31 2 9.07 40 15.07 20 3.37 82
Old Mutual Corporate Bond in GB 0.95 24 9.99 16 14.83 21 1.57 38
PFS TwentyFour Monument Bond in GB 0.98 17 9.2 32 13.4 49 0.6 3
Premier Corporate Bond Monthly Income TR in GB 1.01 13 9.28 30 13.54 48 1.24 13
Rathbone Ethical Bond TR in GB 0.97 21 11.7 3 14.04 35 0.96 4
RBS Sterling Bond TR in GB 0.86 35 1.28 98 2.77 98 3.02 79
Royal Bank of Scot Extra Income TR in GB 0.79 45 8.44 53 13.63 46 1.72 44
Royal London Corporate Bond TR in GB 1 14 9.56 21 14.61 26 1.18 10
Royal London Ethical Bond TR in GB 1.18 7 9.43 25 13.55 47 1.35 19
Royal London Sterling Credit TR in GB 1.16 9 10.2 13 15.33 15 1.4 24
S&W Church House Investment Grade Fixed Interest TR in GB 0.72 57 7.18 75 11.82 69 1.27 15
S&W New Sarum Real Return in GB -1.82 101 0 0 0 0 0 0
Santander Corporate Bond in GB 0 0 0 0 0 0 0 0
Santander Investment Income Portfolio TR in GB 0.81 41 9.15 35 14.22 31 1.58 39
Santander Investment Income TR in GB 0.92 29 7.41 69 10.65 82 2.07 66
Schroder All Maturities Corporate Bond in GB 0.34 93 7.94 60 12.83 57 2.03 63
Schroder Corporate Bond in GB 0.98 19 8.97 43 14.09 33 1.86 54
Schroder Long Dated Corporate Bond in GB 1.29 3 9.29 29 13.93 40 3.93 85
Scot Wid Corporate Bond in GB 0.52 85 9.19 33 13.93 41 2.22 72
Scot Wid HIFML Corporate Bond in GB 0.59 76 7.61 65 12.12 63 1.02 6
SJP Investment Grade Corporate Bond in GB 0.2 96 5.41 83 9.45 84 1.03 7
Skandia Corporate Bond (Signature) in GB 0.63 70 7.59 66 11.35 73 7.41 94
Smith & Williamson Fixed Interest TR in GB 0.41 88 4.98 86 9.77 83 3.19 81
Stan Life Inv AAA Income in GB 0.65 68 4.76 89 6.82 90 2.56 77
Stan Life Inv Corporate Bond in GB 0.41 89 9.12 38 13.97 39 2.08 67
Stan Life Inv Ethical Corporate Bond in GB 0.7 59 9.9 17 15.11 17 1.93 60
Stan Life Inv Select Income in GB 0.5 86 9.23 31 14.79 23 1.86 51
Standard Life TM UK Corporate Bond in GB 0.76 50 9.12 39 14.42 28 2.09 68
SWIP Corporate Bond Plus in GB 0.94 26 10.31 10 15.26 16 1.86 52
SWIP Sterling Bond Plus in GB 0.61 73 3.28 94 6.17 95 2.24 73
Thesis Optima Bond in GB 0.79 46 8.03 59 12.9 55 1.35 21
Threadneedle Medium & Long Dated Corporate Bond TR in GB 1.03 12 10.27 11 15.67 13 1.95 61
Threadneedle Short Dated Corporate Bond TR in GB 0.31 94 4.82 87 7.6 89 0.43 2
Threadneedle UK Corporate Bond in GB 0.66 67 8.93 45 13.99 38 1.49 31
Threadneedle UK Corporate Bond TR in GB 0.67 64 8.61 48 14.12 32 1.63 40
UBS Corporate Bond UK Plus in GB 0.76 49 9.88 18 15.11 18 1.69 43
WDB Fixed Income TR in GB 0.68 63 8.59 50 11.99 67 1.52 34

 




Dennehy Weller & Co Ltd, 3 High Street, Chislehurst, Kent, BR7 5AB. Tel: 020 8467 1666. Authorised and regulated by the Financial Services Authority (http://www.fsa.gov.uk/register/home.do). FSA Registration No: 114360. Registered in England & Wales, No. 1476316. Registered Office: 303 High Street, Orpington, Kent, BR6 0NN. The information contained within this site is subject to the UK regulatory regime and is therefore targeted primarily at investors based in the UK.