June was a positive month for the securities held within our fund. Spreads within our securities tightened. We believe market conditions could lead to further tightening over the summer. The European Central Bank and the Bank of England remain accommodative. This, combined with Covid-19 vaccination levels and the reopening of economies, should be positive for the valuation of our securities. The Federal Reserve on the other hand has been slightly more hawkish. Despite this, interest rates fell during the month, notwithstanding concerns about inflation. It seems that markets believe the inflationary environment should be temporary.

We saw more positive developments within legacy securities in June. For instance, Nationwide tendered a legacy floating rate note at a premium of more than 10 points. NatWest also commenced tender offers on a preference share and another legacy security. Those were conducted at premiums between five to 15 points. We expect similar outcomes on other legacy securities going forward.

Our fund performed in line with expectations during the first half of 2021. We have seen spreads tighten during that period, in line with the strong fundamentals of our issuers in terms of credit quality. The fund also demonstrated its low sensitivity to interest rates, as we saw the 10-year bund increase from -0.6% at the beginning of the year to -0.2% resulting in negative performances from both government and corporate bond indices, in contrast to our positive results. This is mainly due to credit quality in the financial sector tending to improve when rates rise as well as our significant weighting in fixed-to-floater and floating rate securities.

In conclusion, we are still generating relatively high income, with good visibility due to strong credit quality. Valuations remain attractive, and therefore we believe our securities are well positioned to benefit from the current environment.



  • The Valuation date: June 20, 2024
    120,240,618GAM Sustainable Climate Bond fundIE000BSJBO140.00400.0143-0.05700.401.43-5.70
    220,240,618GAM Star Crdt Ops EUR InvIE00B50JD354-0.00190.05960.5789-0.195.9657.89
    320,240,618GAM Star Crdt Ops GBP InvIE00B510J1730.00050.05110.85470.055.1185.47
    420,240,618GAM Star Crdt Ops USD InvIE00B57693100.00070.05090.77200.075.0977.20
    520,240,618GAM Interest Trend IncIE00BYM4P913-0.00050.04780.3207-0.054.7832.07

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