Bond funds that add the most Alpha
FE Trustnet looks at the portfolios that have added the most value in the three most popular fixed interest sectors in recent years.
The latest retail sales figures from the IMA show there was still appetite for fixed income investments in July, with the IMA Sterling Corporate Bond, Sterling Strategic Bond and Global Bond sectors particularly popular, experiencing net inflows of £430m between them.
Here FE Trustnet
looks at those funds that have provided the most Alpha in these sectors over the past three years relative to their respective benchmarks.
A fund’s Alpha represents the added value the manager has provided on top of the gains made by the benchmark he or she is aiming to beat, with a figure of 1 per cent meaning the manager would have made 1 per cent if the benchmark had made 0 per cent.
, manager of the Threadneedle UK Corporate Bond
fund, has added 7.25 per cent to the performance of his IBOXX Sterling Non-Gilts benchmark in the past three years.
The £713.1m fund is available with a minimum initial investment of £2,000 and has a total expense ratio (TER) of 0.94 per cent.
FE Alpha Managers Stephen Thariyan
and Philip Payne
have guided Henderson Sterling Bond
to top-quartile gains of 47.14 per cent over the past three years.
The fund, which has five FE crowns, takes the sector average as its benchmark and has added 6.38 per cent of Alpha.
Its volatility of 6.92 per cent over the period puts it in the bottom quartile of its sector for stability, but investors who are not put off by this can gain access with £1,000. Its TER is 1.45 per cent.
has added Alpha worth 4.06 per cent to the performance of the Rathbone Ethical Bond
fund, which takes the FTSE UK Gilts 5-15 yrs Index as its benchmark.
The fund uses strict ethical criteria to select its investments. It is available with a minimum investment of £1,000 and its TER is 1.36 per cent.
There are three funds with five FE crowns that stand out in this sector.
Royal London Sterling Extra Yield
has had a stellar three years, returning 60.92 per cent to investors.
Manager Eric Holt has added Alpha worth 9.68 per cent over the period to his FTSE Actuaries British Government 15 Years Index.
Performance of fund vs benchmark over 3-yrs
Source: FE Analytics
Over the last year the fund’s performance has been weaker, however, with its 8.87 per cent return putting it in the bottom quartile in the sector. The fund is also in the fourth quartile over five years.
The portfolio has a TER of 1.39 per cent and a minimum investment of £1,000.
AXA Framlington Managed Income
, through manager George Luckraft
, has added Alpha worth 5.01 per cent to its sector average benchmark over three years.
Investors can gain access with £1,000. The fund's TER is 1.12 per cent.
Jupiter Strategic Bond
is available with just £500 and has grown to over £1bn in assets under management.
FE Alpha Manager Ariel Bezalel
has added Alpha worth 7.82 per cent to his iBoxx Sterling Non Gilts All Maturities Index over the period. The fund's TER is 1.51 per cent.
Legg Mason Brandywine Global Fixed Income is the standout performer in the Global Bonds sector. The five FE-crowned fund has added 7.49 per cent to its Citigroup World Government Bond benchmark.
David F Hoffman’s fund is available with a minimum investment of £1000 and has a TER of 1.41 per cent.
7.08 per cent
Alpha produced by the Templeton Global Bond SICAV makes it a close second, although investors will need £5,000 to gain access. The $41bn fund has a TER of 1.40 per cent.
Stan Life Global Index Linked Bond
is available with a more modest £500 minimum investment. Manager Jonathan Gibbs has produced Alpha worth 5.84 per cent on top of the returns of his Barclays Index Linked Bond Index benchmark. The TER is 1.11 per cent.