Global High Yield Bond Fund

Fund overview

The Fund aims to provide a combination of capital growth and income by investing predominantly in sub-investment grade debt issued by companies domiciled in the UK, Europe, Asia and the United States, across the high yield credit spectrum. The Fund may also invest a small portion in investment grade securities. The Fund seeks to outperform its benchmark — BoAML BB-B Global Non-Financial High Yield Constrained — by 1% per annum over rolling three year periods.

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 22 years’ experience of the financial industry. Before joining RLAM he was at Insight Investment Management as Head of High Yield and Leveraged Loans, and manager of a number of high yield credit funds. 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, Global High Yield Fund Manager, has nine years of experience investing in Global High Yield Bonds. He joined RLAM  from Scottish Widows Investment Partnership (SWIP), where, for the prior two years, 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 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 our disciplined credit investment process focusing on security selection combined with top-down macroeconomic analysis. Our value-orientated approach seeks to exploit the inefficiencies that can be found within high yield credit markets across the globe. At the macro level, our 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 our outlook scenarios, including long-term default, yield and interest rate forecasts which helps to shape our investment strategy.

Moving to the micro level, we undertake research on companies, which is supplemented by research from rating agencies and brokers. Our focus is on catalysts that will lead to a change in the risk profile of companies. As part of this process we look at the covenants and security of the debt issues and the motivations of management and the owners. As part of this process, where appropriate, we undertake company visits and meet with management. We believe that risk management is an integral part of our investment process and have set ranges around country, sector and security exposures. Additionally, we use risk systems to monitor value at risk, tracking error and other portfolio risk analytics and have a weekly meeting where the portfolio is reviewed against its asset allocation limits. Overall, we aim to construct diversified portfolios that will deliver consistent alpha from multiple sources.

Product Risk Warning

Past performance is not a guide to future performance. 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.

Investment approach video