With a new fund being added to our preferred list, we spoke with the fund manager to get the inside scoop
Introducing the latest addition to our Platinum 120
We chose this fund due to its ability to outperform the market over time through its nimble and active approach to fixed income investing. ESG is fully integrated into the investment process meaning the portfolio is generally of higher quality when compared to its peers, helping to protect capital in market sell-offs. The fund’s yield is also very competitive at 5.09% (July 2020), offering a yield in excess of the FTSE but with a lot less risk.
To celebrate the fund entering our Platinum 120, we put some questions to the fund’s manager, Parmeshwar Chadha, to find out more about him and the fund he runs.
What does the fund do?
The fund aims to achieve a high income through investing in a broadly diversiﬁed portfolio of high yielding bonds.
What sets the fund apart from others?
A history of ESG integration which we believe leads to better returns (less defaults/distress) over the long term. In addition, by working closely with our large team of equity analysts, we have the ability to analyse listed companies across the capital structure. Having the perspective of a different stakeholder helps to test companies on their messaging and ensure they are being run with an appreciation of the interest of debt holders. Finally, unlike most of its peers, the fund places considerable importance in incorporating top down macro views in helping to determine the portfolio composition.
The combination of all of the above factors has allowed the fund to generate peer-beating risk adjusted returns.
What investments/themes are you currently excited about in the portfolio?
ESG/sustainable investing. At Newton we have a long history of ESG investing and we believe this theme will grow increasingly in importance in a post-COVID environment and companies and sectors which are seen to exhibit good ESG behaviour will deliver far superior returns compared to the ones which are not. Part of the ESG integration is identifying those businesses that are either acting responsibly (and those that are not) and those who are transitioning in a positive ESG trajectory. We believe these issuers will beneﬁt from an improving cost of capital (lower business and ﬁnancial risk), which will provide the opportunity for favourable bondholder returns.
What’s your best ever investment?
Bonds of a chemicals company, which I purchased during the depths of the Global Financial Crisis (GFC) at a cash price of around 5 which a couple of years later was reﬁnanced at par (100).
And the worst?
Investment in a mobile phone retailer.
What is the most important lesson you’ve learnt during your investment career?
Have the patience to stick to investing based on fundamentals and not to be swayed by trading technicals and/or market ‘noise’.
What do you do outside of work?
Travelling (pre-Covid obviously), reading and playing sports. Also a wine enthusiast.
What would you be if you weren’t a fund manager?
Something related to travel and wine.
If you’re interested in finding out more about the fund, you can read our comments on BNY Mellon Global High Yield Bond (income and accumulation), where we go into more depth on the fund and its investment process, as well as the portfolio positioning and performance.
All information given including prices, yields and our opinion is correct at the time of publication. Our opinions on investments can change at any time and for our latest view please go to www.share.com. To understand how our Investment research team arrive at their views please read our Investment Research Policy.