The five crown-rated portfolio also outperformed the Barclays Global Aggregate index, which delivered 81.56 per cent over 10 years.
Performance of fund vs sector and benchmark over 10-yrs
Source: FE Analytics
The high-conviction total return fund has been managed or co-managed by Ian Edmonds since its launch in August 2002. He also runs a UK-domiciled version of the fund, the £612m Global Multi Strategy Bond, which opened in May 2008.
Edmonds, a portfolio manager at Legg Mason subsidiary Western Asset Management, says the performance spread from different parts of the bond market over the last decade has highlighted the importance of a flexible mandate managed with a consistent philosophy and process.
"Performance of fixed income sectors varies, with these changes driven by the economic and political backdrop," he commented.
"More liquid and higher quality sectors such as government and agency mortgage-backed bonds tend to perform well in a weakening growth environment when investors are generally risk averse and expect central banks to cut interest rates."
"Conversely, higher-risk sectors outperform during periods of economic recovery or robust growth when corporate earnings and cashflows are improving and default rates are benign or declining."
Edmonds says investing across the entire global bond universe enables the Global Multi Strategy fund to benefit from the higher return potential of the riskier sectors while maintaining exposure to the greater liquidity and principal protection offered by more defensive ones.
"Having the scope to rotate between sectors gives us the potential to take advantage of changes in valuations and protect capital in volatile conditions," he continued.
"While the fund’s returns have been impacted over shorter periods of time when monetary policy tightens or the global economy is challenged, we have been able to perform strongly over full market cycles."
The Dublin-domiciled vehicle has been one of the least volatile in the sector over the period. It has achieved a top-quartile Sharpe ratio of 0.49 over 10 years, while delivering a second-quartile level of Alpha – or value over and above the momentum of the assets in the portfolio – of 1.11.
The Sharpe ratio calculates the level of a fund’s return above that of a notional risk-free investment – in this case, cash. The difference in returns is then divided by the fund’s standard deviation.
The fund has a minimum investment of £1,000 and an annual management charge of 1.1 per cent. Its total expense ratio (TER) is 1.4 per cent.