A flexibly managed, diversified fixed income fund. The managers aim to deliver attractive risk-adjusted returns by combining a long-term strategic and thematic approach with tactical positioning. Within its sector, the fund features in our 'Dynamic' category.
The fund’s KIID Synthetic Risk and Reward Indicator (SRRI) is 4. This is a regulatory measurement that is, where possible, calculated from the volatility of its weekly performance over a five-year period. A score of 4 means the fund’s historic volatility is between 5% and 10%.
Investors should be aware of the management change in November 2023, whereas the SRRI score is calculated using five-year data. The fund’s volatility is broadly in keeping with that of its peers group funds, which speaks to its diversified nature and the managers’ risk awareness. Different share classes could have different SRRI scores.
The fund is managed by David Ennett, Grace Le and Liam O’Donnell. They work collaboratively on the overall shape of the fund, ensuring that the different underlying risks are understood and controlled. Mr Ennett focuses on high yield, Ms Le manages investment grade portion and Mr O’Donnell leads the team’s strategy on macro and rates. Mr Ennett and Ms Le joined Artemis in 2019 from Aegon Asset Management (formerly Kames Capital), where they managed a range of fixed income funds. Mr O’Donnell joined the firm in November 2023, having previously worked at abrdn. They are members of Artemis’ Fixed Income team, headed by Stephen Snowden
The managers believe that, over the longer term, they can deliver attractive, risk-adjusted returns compared to individual fixed income asset classes using a flexible investment approach. The fund’s global, unconstrained mandate facilitates this flexible approach, enabling them to implement their macro-economic and strategic bond preferences, whilst also being alive to short-term tactical opportunities.
The allocation between the different fixed income asset classes is driven by market opportunities and by their levels of conviction across those markets. Indeed, the managers aim to construct a fund which is sufficiently diversified and to avoid unintended industry and/or name concentration. Typically, the fund holds between 75 and 175 issues and currency exposures are usually hedged back to sterling. Aggregate portfolio duration can lie anywhere in the range of 0 to 10 years, though in practice it has ranged between 3 and 8 years. Portfolio risk assessments are undertaken by Artemis’ independent risk team and Artemis’ Management Committee.
The managers seek to include a wide range of inputs into a diversified portfolio. Thus, the team looks to add value through both macro-economic analysis and credit analysis, taking asset allocation, interest rate, sector and issuer risks. The starting point for the process is an assessment of the macro-economic environment and its implications for the various fixed income asset classes. They aim to understand market consensus, and what’s priced into markets in terms of the economic outlook. An appreciation of market technicals is also an important facet of their work. This research influences the fund’s duration, yield curve and asset allocation (including country preferences), with the managers meeting weekly to discuss and review the strategy’s overall positioning in relation to their collective assessment of the fixed income environment.
The selection of individual bonds for the portfolio is undertaken by the managers, who are experts in their respective segments of the fixed income market. This selection process incorporates industry research, company balance sheet and cashflow analysis and the sharing of information with the broader Artemis fund management team. The managers favour companies with resilient business models that support sustainable cash flow generation, enabling them to meet cash flow commitments comfortably. For those companies identified as having the highest upside, the managers consider the specific bond within the issuer structure that allows for the most attractive risk/return opportunity.
Formal documentation, including the fund prospectus and the KIID, should be sought directly from the asset manager. For ease of reference, a link to the ASSET MANAGER WEBSITE can be found above.
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