Michael Count
Senior Fund Manager, Fixed Income
LF Canlife Corporate Bond Fund
About the Fund
The fund aims to maximise return and to provide a half-yearly income mainly from investment in sterling-denominated investment grade corporate bonds whilst seeking to capitalise on their additional income relative to UK government bonds
Essential features of the Fund
LF Canlife Corporate Bond Fund:
- The managers’ approach is flexible within a framework. They do not attempt to track the comparator benchmark, but are always aware of the Fund’s positioning against it
- The Fund has no specific targets in relation to market sectors
- The managers believe the avoidance of bad credits is critical to success and therefore the Fund concentrates on investing in bonds from companies the managers and the Canada Life credit team believe are financially strong
- The Fund has a conservative, low risk style, focusing on capital preservation and sustainable income
For further details on the objective and investment policy, visit the Literature section to view fund KIIDS and Prospectus.
How the Fund is managed:
- The managers consider global trends in macro factors, such as interest rates and inflation, and analyse the domestic influences on UK bond markets
- A detailed quarterly macro review is undertaken making forecasts for interest rates and bond yields in the UK
- A weekly review involving the entire fixed income team is undertaken to assess positioning and market developments, including commodity prices, inflation expectations, currencies, equity markets, sovereign CDSs, liquidity, bond yields, economic data releases, new issues coming to the government and corporate bond markets
- The Fund is then constructed via a bottom-up approach, with the managers ensuring that the Fund’s sector exposure is sufficiently diversified, as well as reflective of the teams’ macro views. Looking at each sector, they seek the best-value companies and review valuations on three levels: price relative to peer issues, price relative to past performance, price relative to outlook and ratings
Kshitij 'KJ' Sinha
Fund Manager, Fixed Income
Reasons to recommend
Attractive Income
We seek to invest in corporate bonds that look attractive from a risk/return perspective and which are capable of delivering attractive yields to investors. As a result, the Fund aims to provide investors with an above-inflation income, through investment in companies that we believe offer the best long-term value.
A focus on fundamentals
Particular attention is devoted to corporate dynamics and strategy, balance sheet strength, liquidity, leverage and management quality. Our team favours issuers displaying a number of different characteristics – including solid profitable businesses with long track records, limited ratings downsides, positive cash flows, low debt levels, clear disclosures and bonds offering structural seniority.
Active management
The Fund is actively managed and well diversified, and aims to offer a lower volatility and drawdown profile relative to the benchmark. The Fund may not be not be appropriate for investors who plan to withdraw their money within 5 years.
The value of investments may fall as well as rise and investors may not get back the amount invested.
Latest Market Insights & Fund Updates
BBB Risk: To be or not to be
Triple-B rated corporate bonds have attracted much attention this year as they now represent more than half of the Investment Grade market. The growing number of BBBs is largely attributed to how Quantitative Easing and an unusually long period of low interest rates have made it easier and cheaper for companies to lever up and finance their businesses.