The fund’s net asset value (NAV) increased by 1.2% over the quarter (EUR Inst), versus the Barclays EUR Aggregate Corporate Total Return Index, which decreased by 0.7%.
Performance of the fund for the period
There 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 3.3%. We received 0.8% 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 positive contribution despite the rise in interest rates.
The aggregate positive contribution of the top 10 contributors was approximately 0.7%, A combination of different types of securities, such as additional tier-one (AT1) contingent convertibles (CoCos) and legacy bonds were the top performers. We believe that there is significant upside potential among these securities as spreads remain significantly wider than pre-Covid-19.
The aggregate negative contribution of the bottom 10 detractors was approximately -0.2%. We have seen small pockets of underperformance during the quarter, notably among securities with slightly more interest rate sensitivity.