The fund is managed by Richard Hodges. He joined Legal & General Investment Management (LGIM) in 2007 and has managed this fund since its launch in April 2007. The manager also runs the Fixed Interest Trust, the Monthly Managed Income Trust and the Managed Income Trust. In managing the Dynamic Bond Trust, the manager draws upon LGIM's broader fixed income team to help hone his best ideas for the fund. He also sits on the asset allocation committee.
Performance of fund, manager vs peer group over 1-yr
Source: Financial Express Analytics
The manager believes that through an unconstrained investment vehicle, using a global asset allocation approach and the flexibility afforded by UCITS III powers, he is able to generate an attractive return compared to the broader fixed income market with a lower degree of risk. He looks to add value through three key areas: asset allocation, directionality and relative value opportunities.
Asset allocation is determined through his assessment of the relative values of fixed income market segments; directionality can be expressed in a variety of ways through derivatives on, for example, yield curve moves; relative value ideas can be identified in sectors and stocks and are expressed through long, short and long/short positions through physical bond and derivatives instruments.
He draws upon the various fixed income teams to help him to generate the most efficient ideas for the fund in terms of risk and return – the teams are Global Government Bonds & Cash, UK Investment Grade, European Investment Grade, Pan-European Credit Research, US Credit Research, Strategy Team, Structured Credit, Global High Yield. The manager has a great deal of communication with the analysts on a day-to-day basis and their views are formalised through a series of meetings.
To help with idea generation they use a proprietary system called BASyS which highlights relative value ideas. Ideas can be longer-term and more strategic in nature or shorter-term and more tactical but in all cases, the manager identifies the risks to which he wishes the fund to be exposed and hedges out the risks that he wishes to avoid, for example, separating interest rate and credit risk.
Indeed, the manager describes himself first and foremost as a risk manager and considers risk awareness to be as important as value generation. He monitors the value-at-risk inherent in the portfolio on a daily basis and the portfolio is independently monitored by the Investment Risk Management team.
This is an actively managed fixed income fund that uses the flexibility afforded by UCITS III powers. It therefore invests in a wide variety of fixed income instruments including credit derivatives, exchange traded futures and interest rate swaps. Portfolio risk is monitored closely by the manager and the Investment Risk Management team and risk in a broader sense, for example, counterparty risk, is monitored actively by LGIM.
As well as identifying the risk associated with individual strategies, the manager is also careful to consider the risks of the portfolio as a whole and the potential for unintended risks. While the fund's asset allocation is unconstrained, the manager does analyse risk compared to a neutral position of 50 per cent in investment grade bonds and 50 per cent in high yield bonds.
Anthony Macdonald, investment research analyst at OBSR, commented: "We have high conviction in the manager's ability to deliver attractive performance to investors. He draws on his experience in managing both long-only bond funds and hedge funds to offer a product that aims to identify specific opportunities in the fixed income universe, from both tactical and strategic perspectives. This is complemented by his sophisticated understanding of risk in building a portfolio that is able to isolate and exploit these opportunities effectively. We believe that the manager's experience and risk-aware mindset make him well-placed to manage this dynamic and strategic bond fund."
The views in this article are those of OBSR