Rathbone Ethical Bond, TwentyFour Asset Income and PIMCO GIS Income are three funds that can be held together in a low maintenance, long-term portfolio, according to The Share Centre’s Tracy Zhao (pictured). 
Having previously spoken with AJ Bell’s Ryan Hughes, GDIM’s Tom Sparke and Interactive Investor’s Dzmity Lipski, this week investment research analyst Zhao highlights the three funds she believes can be held together for the long term.
Rathbone Ethical Bond
The first fund on Zhao’s list is the £1.4bn five FE Crown-rated Rathbone Ethical Bond fund, a bond fund that targets a high yield and has an ethical overlay.
“Co-managed by Bryn Jones and Noelle Cazalis, the fund predominantly invests in investment-grade bonds which consider economic and political trends, company analysis and thematic ideas,” Zhao said.
“Over 50 per cent of the fund invests in insurance and banks, reflecting the managers’ preference and conviction on commercial banks.”
She added: “It is one of the top performers in terms of risk-adjusted return in the IA Sterling Corporate Bond sector over a three-year period.”
Performance of fund vs sector & benchmark over 5yrs
Source: FE Analytics
Rathbone Ethical Bond has made a 32.42 per cent total return over the past five years, outperforming the IA Sterling Bond sector which made 26.21 per cent.
The fund has an ongoing charges figure (OCF) of 0.67 per cent and has a yield of 3.70 per cent.
TwentyFour Asset Backed Income
Zhao’s next recommendation is the £116.9m, team-managed TwentyFour Asset Backed Income fund, which targets an attractive level of income with the opportunity for income growth.
The team invest in a portfolio of European asset-backed securities such as residential mortgages, commercial mortgages and loans. As part of its investment process the team also consider environmental, social & governance (ESG) factors.
“The fund invests in a diversified portfolio of UK and European asset-backed securities, which have higher lending standards, alignment of interest and borrower recourse,” she said.
“The market value of an asset-backed security is tied closely to the performance of their underlying assets, rather than market forces and so they tend to be much less volatile than other bonds during an economic downturn.”
Zhao added: “At the same time asset-backed securities tend to offer higher yields over government issues and investment-grade corporates and has low-to-negative correlation to traditional assets.”
Performance of fund vs sector & benchmark over 5yrs
Source: FE Analytics
TwentyFour Asset Backed Income has made 25.06 per cent over the past five years. It has an OCF of 0.63 per cent and an underlying yield of 5.62 per cent.
Pimco GIS Income
The final fund on Zhao’s list is the $74.4bn Pimco GIS Income fund, which targets an attractive level of income whilst maintaining a relatively low-risk profile and is overseen by managers Alfred Murata, Daniel Ivascyn and Joshua Anderson.
Pimco GIS Income invests across a range of fixed income assets and pays a monthly dividend.
“Consistent and responsible dividend delivery is the main focus of the fund and the managers who favour investment opportunities in securitised credit exposure which has attractive yield with limited downside,” explained The Share Centre’s analyst.
“In recent times the fund has been moving towards a more defensive position in its corporate high yield credit. It has managed to achieve consistent top-quartile cumulative downside captured over a five-year period.”
Performance of fund vs sector & benchmark over 5yrs
Source: FE Analytics
The five FE Crown-rated fund made a return of 22.30 per cent over the past five years, outperforming the average IA Sterling Strategic Bond peer’s 20.83 per cent gain. It has an OCF of 0.55 per cent and an annualised distribution yield of 3.96 per cent.