Volatility, downside risk, historic yield and the amount of value a manager adds to their benchmark – or Alpha – are also important areas to consider when analysing performance.
In the fifth instalment of the "well-rounded" series, FE Trustnet examines bond funds that excel across the board.
IMA Sterling Corporate Bond
Of the 72 funds in IMA Sterling Corporate Bond with a long enough track record, five funds are top-quartile for returns, volatility, Alpha and maximum losses.
These include the two best-returning vehicles in the entire sector, which are both under the management of M&G Investments.
Richard Woolnough’s £3.7bn M&G Strategic Corporate Bond fund has returned 47.76 per cent in the last five years, outperforming the average fund in its sector by 34.24 per cent. Woolnough’s M&G Corporate Bond fund has returned 35.83 per cent in this time.
Measures of performance for funds and sector over 5-yrs
| Name |
Returns (%) |
Volatility (%) |
Alpha (%) |
Max losses (%) |
| M&G Strategic Corporate Bond |
47.76 |
5.48 |
6.07 |
-5.46 |
| M&G Corporate Bond |
35.83 |
5.37 |
4.18 |
-5.76 |
| S&W Church House Investment Grade Fixed Interest |
24.82 |
4.4 |
2.52 |
-5.2 |
| Jupiter Corporate Bond |
24.82 |
5.43 |
2.08 |
-6.8 |
| CF Walker Crips Corporate Bond |
18.59 |
4.22 |
1.31 |
-5.29 |
| IMA Sterling Corporate Bond |
13.52 |
6.52 |
N/A |
-9.57 |
Source: FE Analytics
Woolnough has added more value to his benchmarks than any other manager in the sector, and both funds are among the 15 least volatile of their kind over five years.
Both funds top their sector in terms of returns and volatility over a three-year period, too.
However, both of Woolnough’s vehicles are yielding less than the sector average. According to FE Analytics data, both funds have a one-year historic yield of less than 3.5 per cent.
The much smaller CF Walker Crips Corporate Bond fund is also well worth a mention. As well as being a top-quartile performer for returns, it is the least volatile vehicle of its kind over a five-year period.
IMA Sterling Strategic Bond
Fidelity Strategic Bond, UBS Active Bond and Rothschild RPIC Preferred Income are the only funds that top the sector for all four performance measures over five years.
Ian Spreadbury’s Fidelity Strategic Bond fund has been the best-performing vehicle in IMA Sterling Strategic Bond since September 2006, with returns of 35.36 per cent – more than twice as much as its sector average. It also has the highest Alpha in the sector during this time.
While Spreadbury’s fund is one of the least volatile in the sector, UBS Active Bond and Rothschild RPIC Preferred Income are even better suited to risk-averse investors.
Alix Stewart and Simon Foster’s UBS Active Bond fund has a volatility of just 2.6 per cent, compared with 5.93 per cent from Fidelity Strategic Bond and 6.93 per cent from the sector average. The vehicle has returned 23.54 per cent over five years.
IMA Global Bond
FE Alpha Manager Stuart Cowley’s Old Mutual Global Strategic Bond fund has the best risk-adjusted returns in the IMA Global Bonds sector over five years, and by some distance.
It is the only fund that is top-quartile for returns, volatility, Alpha and maximum loss during this period. While 10 funds have returned more than Cowley’s vehicle over five years, the majority of these are among the most volatile in the sector.
Performance of funds vs sector over 5-yrs
Source: FE Analytics
Investec Emerging Markets Local Currency Debt, for example, tops the sector with returns of 111 per cent over five years; however, it is also the sixth most volatile of its kind.
Schroder ISF Emerging Europe Debt Absolute Return is the highest-yielding fund in the sector, with a one-year historic yield of 14.51 per cent. It has outperformed its sector average by 10.57 per cent over five years, but, like Investec Emerging Markets Local Currency Debt, it is very volatile.
IMA Sterling High Yield
Of 20 funds in IMA Sterling High Yield with a long enough track record, Ece Ugurtas’ Baring High Yield Bond fund is the only one that is top-quartile for all four performance measures over five years.
It tops the sector for both returns and Alpha over this period, and is also among the four least-volatile High Yield funds.
With a one-year historic yield of 7.02 per cent, Ugurtas’ vehicle is also the third highest-yielding fund in the sector.
In the next instalment, FE Trustnet will examine the top well-rounded funds in global small cap sectors.