Short Duration Global High Yield Bond Fund


Fund overview

The Fund invests a large portion of its assets in short maturity sub-investment grade bonds issued by companies domiciled in the UK, Europe, Africa, Asia and the Americas. The Fund may also invest in short maturity investment grade securities. It may also invest in short maturity bonds issued by European governments and government related agencies. The Fund may use financial derivatives, but for efficient portfolio management purposes only.

Fund managers

The lead fund manager is Azhar Hussain, he is supported by fund manager, Stephen Tapley.

Azhar Hussain joined RLAM in May 2012 as Head of Global High Yield. Azhar has 21 years’ experience of the financial industry. Before joining RLAM he was at Insight Investment Management as Head of High Yield and Leveraged Loans, and the manager of a number of high yield credit funds, including contributing to the high yield component of the Absolute Insight Credit Fund. Prior to Insight, he worked at Gulf International Bank (GIB) in London, specialising in global high yield. He joined GIB in 2001 as an analyst, before assuming his first portfolio management role two years later and subsequently establishing a high yield team. Azhar began his career at Deloitte & Touche in 1996, where he qualified as a Chartered Accountant. Azhar has a BA in Economics and Law from the University of London (School of Oriental & African Studies).

Stephen Tapley joined RLAM in 2012 as an assistant fund manager reporting to Azhar Hussain.  He joined from Scottish Widows Investment Partnership (SWIP), where he was a high yield analyst focusing on the European market and covering the chemicals, paper & packaging, healthcare and heavy industrials sectors.  His research role included credit and liquidity modelling, and idea generation.  Prior to SWIP he spent over three years as an investment analyst at Gulf International Bank UK, where he focused on European high yield credit and specialised on event-driven idea generation for a range of long only and hedge fund strategies.  A CFA Charterholder, Stephen holds a BEng in Mechatronic Engineering and an MSc in Financial & Industrial Mathematics, both from Dublin City University.

Investment approach

The Fund is managed using the disciplined credit investment process of RLAM's Fixed Interest Team focusing on security selection combined with top-down macroeconomic analysis. This value-orientated approach seeks to exploit the inefficiencies that can be found within high yield credit markets across the globe. At the macro level, analysis starts with a quarterly economic review which covers all major economic regions and focuses upon key variables such as growth rates and inflation. This meeting is also used to formulate outlook scenarios, including long-term default, yield and interest rate forecasts which helps to shape the managers' investment strategy.

Moving to the micro level, in-house company research is undertaken, which is supplemented by research from rating agencies and brokers. The managers focus on liquidity with the aim of allowing the debt to be redeemed with low volatility. As part of this process the cashflows of the company, its access to the debt markets, the covenants and security of the debt issues and the motivations of management and the owners are all considered.  Where appropriate, company visits are undertaken to allow the managers to meet with management.

Risk management is an integral part of the investment process and the managers have set ranges around country, sector and security exposures. Additionally, risk systems are used to monitor value at risk, tracking error and other portfolio risk analytics and the managers have a weekly meeting where the portfolio is reviewed against its asset allocation limits. Overall, the managers aim to construct diversified portfolios with the potential to deliver consistent alpha from multiple sources.

Product Risk Warning

The value of investments and the income from them is not guaranteed and may go down as well as up and investors may not get back the amount originally invested. For funds that use derivatives, their use may be beneficial, however, they also involve specific risks. Derivatives may alter the economic exposure of a fund over time, causing it to deviate from the performance of the broader market. Sub-investment grade bonds have characteristics which may result in a higher probability of default than investment grade bonds and therefore a higher risk.

Short duration bonds ezine

Investment approach video