Monthly Commentary – September 2021 USD

by | Oct 8, 2021 | Analysis & Performance, News, USD

During the month of September, spreads within our securities remained relatively stable to slightly weaker, despite concerns linked to tapering, higher interest rates, China’s Evergrande and higher energy prices. This low volatility once again demonstrates the strong technical demand for the securities held within our portfolio. With spreads of approximately 300 bps, the subordinated debt of financials remains an attractive asset class, especially considering the strong fundamentals in terms of credit quality. On top of that, subordinated debt has low sensitivity to interest rates, as demonstrated by the performance of US Treasuries, which moved up by 18 bps, as well as the year-to-date performance. 

As of 1 October, European banks do not have any restrictions linked to dividend payments. To our minds, this demonstrates the strength of European financials and the fact they have been extremely resilient during the global health crisis we have experienced. Non-performing loans are currently at low historical levels and capital is at the highest historical level with Common Equity Tier 1 (CET1) ratios close to 16%. As such, we have strong visibility regarding the income we are receiving from coupon payments. 

To conclude, we believe our strategy is well positioned for the current environment. As we have demonstrated in the past and indeed in 2021 to date, our strategy has low sensitivity to interest rates. Moreover, we are still generating high income, with good visibility due to the strong credit quality of financials. Finally, valuations remain attractive, and as such, we believe the fund should benefit from that going forward. 

  • The Valuation date: November 27, 2024
    serieAsOFDateFKFundNameisinPerformanceTRMTDPerformanceTRYTDPerformanceTRSinceInception
    120,241,128GAM Sustainable Climate Bond fundIE000BSJBO140.01400.0600-0.0145
    220,241,128GAM Star Crdt Ops EUR InvIE00B50JD3540.00990.11370.6596
    320,241,128GAM Star Crdt Ops GBP InvIE00B510J1730.00800.09630.9344
    420,241,128GAM Interest Trend IncIE00BYM4P9130.00460.09430.3793
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