The widespread chase for yield in 2012 saw large amounts of attention paid to high yield bond funds but who are the sector’s top performing managers as we enter 2013?
Taking a look at those with a long-standing track record, there are 43 global high yield bond managers in the Citywire database with a five-year performance history from November 2007 to November 2012.
Over this period, the average global high yield bond manager returned 38.61% in US dollar terms, with 20 of the 43 fund managers posting a better figure. This equates to 46% of managers outperforming the average peer.
Meanwhile, the most commonly used index, the BofA Merrill Lynch Global High Yield TR, rose 59.8% over the same period and only five managers (11%) managed to outperform this benchmark.
So who were the five managers in question and how are their portfolios currently positioned?
Michael Buchanan, Western Asset Management
Five-year TR (November 2007-November 2012): 60.17%
The first of the five managers in Citywire’s database to break the 60% total return mark over the past five years is Western Asset Management’s Michael Buchanan, who also runs an Alternative Ucits credit strategy on behalf of parent company Legg Mason Asset Management.
The former Janus Capital man has focused his fund on B-rated securities, which, at the end of November 2012, made up 35% of his fund’s exposure by credit quality. In terms of sector, he has a preference for emerging market corporate bonds, with 10.7% of the fund allocated here.
Michael Hasenstab/Eric Takaha, Franklin Templeton
Five-year TR (November 2007-November 2012): 61.54%
Famed bond investor Michael Hasenstab is recognised in this round-up for his performance on the $244 million Templeton Global High Yield fund alongside Eric Takaha. The pair were named co-managers on the Luxembourg-domiciled fund when it was launched in September 2007.
According to the November 2012 factsheet, Hasenstab and Takaha have the majority of the fund in the US market but the top 10 holdings shows a diverse array of corporate and sovereign bonds from some exotic emerging markets.
For example, the duo’s fifth and seventh largest holdings are in Ghanaian government debt, while Polish, Mexican and Malaysian sovereign bonds also feature alongside a position in Halyk Savings Bank of Kazakhstan.
Ece Ugurtas, Barings
Five-year TR (November 2007-November 2012): 64.87%
The second best-performing manager in our round-up is Barings’ Ece Ugurtas, who took over the €1.1 billion strategy from Marino Valensise in September 2007. She previously also ran the firm’s EM debt local currency fund between December 2006 and November 2010.
In her most recent market update, Ugurtas stated the fundamentals for high yield ‘remain sound’ coming into 2013 and expects minor fluctuations caused by Europe and on-going Fiscal Cliff wrangling to be overcome.
Therefore, Ugurtas has positioned herself primarily in the US market. She has 52% of the fund exposed to the US high yield market, with a further 5.5% in US Treasury Bills.
Karina Sirkia, EDM Gestion
Five-year TR (November 2007-November 2012): 66.04%
Leading the way in global high yield over the past five years is Barcelona-based fund manager Karina Sirkia. Sirkia has returned 6.24% percentage points more than the benchmark on EDM Credit Portfolio, which she has run since January 2006.
The €237 million fund is mainly invested in B2-rated bonds at present, with this type of bond making up 21% of the exposure by credit quality. Meanwhile, energy (16%) and telecommunications (9%) are the two main areas of investment by sector.