Tipped by Investors Chronicle in early January this year (at the time it was named the Aegon High Yield Bond Fund), Kames High Yield Bond Fund has not been immune to the sell-off suffered by the high yield asset class in August.
Investors fled risky assets as concerns grew over the escalating debt crisis in the eurozone, the debt ceiling impasse in the US and fears over a global economic slowdown.
Despite these concerns, the fund has held up well, finishing in the first quartile in its sector for the year to date. Fund manager Philip Milburn puts this down to the fund's defensive positioning and the ability to avoid the worst affected stocks through disciplined stock-picking. Despite this defensive approach, the fund is still delivering a positive return and attractive distribution yield of more than 7 per cent.
The fund's aim is to maximise total return by investing in a portfolio of predominantly high-yield bonds, selected investment grade bonds and cash. The defensive stance means that the fund has protected investors' money from capital falls, but if the market does improve it is likely that the fund may lag.
Mr Milburn, who has been involved in the high-yield market since the late 1990s, believes that the ongoing debt problems in Europe will lead to further weakness in credit, creating a buying opportunity.
| KAMES HIGH YIELD A INC (SEOPAI) | |||
|---|---|---|---|
| PRICE | 48.42p | 3-YEAR SHARPE RATIO | 0.69 |
| IMA SECTOR | £ High Yield | 1 YEAR PERFORMANCE | 5.32% |
| FUND TYPE | Oeic | 3 YEAR PERFORMANCE | 32.56% |
| FUND SIZE | £434.09mn | 5 YEAR PERFORMANCE | 31.68% |
| No OF HOLDINGS | 18-Mar-00 | TOTAL EXPENSE RATIO | 1.07% |
| SET UP DATE | 01-Mar-02 | DISTRIBUTION YIELD | 7.23% |
| MANAGER START DATE | 18-Nov-03 | MINIMUM INVESTMENT | £500 initial |
| 3-YEAR BETA | 0.79 | MORE DETAILS | kamescapital.com |
Source: Investors Chronicle Funds Data, Kames Capital
Performance figures as at 3 October 2011
Top 10 holdings (as at 31 August 2011)
| Ziggo Bond Co 8% 15/05/2018 | 2.03 |
| Warner Chilcott (US 7.75% 15/9/18 | 2.01 |
| Jarden Corporation 7.5% 15/01/20 | 1.96 |
| Sunrise Communicate 7% 31/12/17 | 1.91 |
| HCA Inc 7.75% SRN 15/05/21 | 1.91 |
| Care UK Health 9.75% 01/08/17 | 1.89 |
| Sable International 7.75% 15/02/17 | 1.87 |
| FMG Resources AUG 6.375% 1/02/16 | 1.78 |
| Enterprise Inns 6.5% 6/12/18 | 1.77 |
| TMD Friction Finance 10.75% 15/05/17 | 1.77 |
Credit allocation breakdown
| BBB | 6.91 |
| BB | 44.00 |
| B | 34.65 |
| CCC | 5.57 |
| C | 0.49 |
| N/R Investment Grade | 1.47 |
| N/R High yield | 3.23 |
| Cash | 3.68 |
