Kames Strategic Bond delivers an inflation-beating yield of 4.26 per cent and its performance ranks in the second quartile of strategic bond funds over five years, although it has not done so well over three years and has made a negative return over one year.
The fund aims to maximise total return by investing in global debt instruments ranging from AAA government bonds through to high-yield and emerging market corporate bonds. At least 80 per cent of assets are invested in sterling or bonds hedged back to sterling.
The fund may also invest in deposits, money market instruments, derivative instruments and forward transactions.
The fund's managers seek six potential drivers of outperformance: asset allocation, duration positioning, yield curve positioning, stock selection, rating selection and sector selection. They seek to exploit inefficiencies in markets, choosing bonds by assessing economies and bond markets as well as the attributes of the bond issuers.
The fund has experienced managers in Phil Milburn and David Roberts, who are backed by a further team of around 20, who manage the fund using Kames' fixed-income investment process.
The fund has a relatively concentrated portfolio of 106 stocks because its managers like to back their convictions with meaningful positions in best ideas arising from global rates and credit specialists, research. The concentration adds to the risk, however the team mitigates this by applying a four-stage risk control framework to keep this at a minimum ensuring that no one risk dominates strategy and performance.
KAMES STRATEGIC BOND A INC (GB0033988436) | |||
| PRICE: | 108.91p | MEAN RETURN: | 15.17% |
| IMA SECTOR: | Sterling Strategic Bond | SHARPE RATIO: | 1.67 |
| FUND TYPE: | Open-ended investment company | 1-YEAR PERFORMANCE: | -0.06% |
| FUND SIZE: | £513.09m | 3-YEAR PERFORMANCE: | 43.38% |
| No OF HOLDINGS: | 106* | 5-YEAR PERFORMANCE: | 25.37% |
| SET UP DATE: | 16 December 2003 | TOTAL EXPENSE RATIO: | 1.31% |
| MANAGER START DATE: | 1 March 2004/1 November 2009 | MINIMUM INVESTMENT: | £500 |
| YIELD: | 4.26 | MORE DETAILS: | kamescapital.com |
| STANDARD DEVIATION: | 8.74% | ||
Source: Morningstar & Kames Capital
Performance data as at 31 May 2012
Top 10 holdings as at 30 April 2012
| NEW ZEALAND(GOVT) 6% 15/05/2021 | 8.67 |
| UK(GOVT OF) 4.5% STK 7/12/2042 | 5.55 |
| EURO INV BANK 6% BDS 6/08/2020 | 2.68 |
| RSA INSURANCE GRP 9.375%-FRN 5/39 | 1.50 |
| ROYAL BK SCOT 9.5%-FRN 16/03/22 | 1.46 |
| FIRST HYDRO FINANC 9% SEC 21 | 1.36 |
| RWE AG 7%-FRN SUB 12/10/72 | 1.28 |
| ABP FINANCE PLC 6.25% 14/12/2026 | 1.26 |
| UBS AG JERSEY 4.28%-FRN SUB PERP | 1.22 |
| CARE UK HEALTH 9.75% 1/08/17 | 1.20 |
Sector breakdown
| CORPORATES 0 TO 5 YEARS | 19.00 |
| CORPORATES 5 TO 15 YEARS | 28.55 |
| CORPORATES 15+ YEARS | 8.33 |
| HIGH YIELD 0 TO 5 YEARS | 6.87 |
| HIGH YIELD 5 TO 15 YEARS | 8.88 |
| HIGH YIELD 15+ YEARS | 7.70 |
| GOVERNMENT 5 TO 15 YEARS | 8.18 |
| GOVERNMENT 15+ YEARS | 5.86 |
| INDEX LINKED 15+ YEARS | 0.76 |
| DERIVATIVES | -36.75 |
| CONTRAS | 35.69 |
| CASH | 6.93 |
