Senior Fund Manager, Fixed Income
The Fund aims to provide an income and the potential for capital growth, over any five-year period, after all costs and charges have been taken. The Fund’s comparator benchmark is the Markit iBoxx UK GBP Non-Gilts 1-5 Years Total Return Index.
LF Canlife Short Duration Corporate Bond Fund
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 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
Less sensitivity to higher rates
With corporate bond yields at historically low levels, any potential move higher in rates – or a widening of spreads – can have a meaningful impact on investor returns. Investing in short duration corporate bonds can minimise sensitivity to rising yields, while dampening down the impact of credit market volatility.
Our philosophy is founded on the strong belief that the avoidance of bad credits is critical to success and concentrates on investing in bonds from companies the managers and the Canada Life Asset Management credit team believe are financially strong. This is particularly important in the short duration space, where one default has the potential to eliminate a year’s worth of income. Therefore, the managers have a conservative, low-risk style, focusing on capital preservation and sustainable income.
Established team and strong credit analysis
Our credit analysis team has in-depth knowledge of individual corporates and sectors, drawing on the firm’s long experience in annuity management. Fund Managers Mike Count became manager in 2007 and Steve Matthews took on responsibility for cash funds in 2002, whilst Roger Dawes, Head of Fixed Income – Portfolio Management joined Canada Life Asset Management in 1998.
The last 12 months have seen fixed income assets fall in value at different times, for different reasons. The onset of the covid-19 crisis in March 2020 saw credit spreads widen significantly, negatively impacting the performance of credit-focused bond funds as investors dashed for the safety of government bonds. These assets outperformed as yields tumbled.
Short-duration bonds aren’t purely a defensive play. Mike Count, manager of the LF Canlife Short Duration Corporate Bond Fund, sees selective opportunities for attractive returns among recovery and growth names.