The fund’s NAV decreased by 0.69% over the quarter, versus the Bloomberg EUR Aggregate Corporate Total Return Index, which decreased by 0.66%.
Performance of fund for the periodThere are two important sources of return for the fund. The first, which is significant and always positive, is the income from the underlying bonds. The yield to maturity of the fund is 3.49%. We received 1.04% in accrued income during the period. The second component of return for the fund is realised / unrealised capital gains or losses. In general, as the fund follows a fundamental buy and hold strategy, this component is largely the result of prices being marked up or down. During the period, this had a negative contribution of more than 1.5%. We believe this should revert over time and consequently, our fund should benefit from that.
Performance contributors The aggregate positive contribution of the top 10 contributors was approximately 0.13%. A combination of different types of securities, such as legacies, corporates and some AT1s, were the top performers. We feel that there is upside among these securities as often spreads remain wider than pre-Covid.
Performance detractors The aggregate negative contribution of the bottom 10 detractors was approximately 26 bps. We have seen small pockets of underperformance during the quarter, particularly within corporates. Notably, those which included Real Estate corporate hybrids. The Rabobank Certificates also underperformed during the quarter. However, at spreads of close to 450 bps, we feel those securities offer particularly good value.