For individual investors in the UK

Are bonds making a comeback?

Nicholas Ware, Co-Portfolio Manager of Henderson Diversified Income Trust, talks about the Company’s performance year-to-date, areas where he is finding opportunities and how he is navigating interest rate and inflation risk in a volatile market environment.

Catch up on previous episodes of Trust Radio

Jenna Barnard, CFA

Jenna Barnard, CFA

Co-Head of Global Bonds | Portfolio Manager


John Pattullo

John Pattullo

Co-Head of Global Bonds | Portfolio Manager


Nicholas Ware

Nicholas Ware

Portfolio Manager


24 Oct 2022
15 minute listen

Key takeaways:

  • Geopolitical tensions, elevated market volatility, and tightening monetary policy have engendered a difficult environment for fixed income investors.
  • We have been increasing our exposure to investment grade bonds whilst reducing our gearing, thereby reducing the overall risk of the portfolio. We continue to look for non-cyclical, modern day facing businesses with good free cash flow yield.
  • We see this as a time for caution and flexibility within the portfolio. However, higher yields are adding to the attractiveness of bonds and investors can potentially earn a higher income while pursuing resiliency during a period of high volatility.

These are the views of the author at the time of publication and may differ from the views of other individuals/teams at Janus Henderson Investors. Any securities, funds, sectors and indices mentioned within this article do not constitute or form part of any offer or solicitation to buy or sell them.

 

Past performance does not predict future returns. The value of an investment and the income from it can fall as well as rise and you may not get back the amount originally invested.

 

The information in this article does not qualify as an investment recommendation.

 

Marketing Communication.

 

Glossary

 

 

 

Important information

Please read the following important information regarding funds related to this article.

Before investing in an investment trust referred to in this document, you should satisfy yourself as to its suitability and the risks involved, you may wish to consult a financial adviser. This is a marketing communication. Please refer to the AIFMD Disclosure document and Annual Report of the AIF before making any final investment decisions.
    Specific risks
  • If a Company's portfolio is concentrated towards a particular country or geographical region, the investment carries greater risk than a portfolio diversified across more countries.
  • Higher yieldings bonds are issued by companies that may have greater difficulty in repaying their financial obligations. High yield bonds are not traded as frequently as government bonds and therefore may be more difficult to trade in distressed markets.
  • This Company is suitable to be used as one component in several in a diversified investment portfolio. Investors should consider carefully the proportion of their portfolio invested into this Company.
  • Active management techniques that have worked well in normal market conditions could prove ineffective or detrimental at other times.
  • The Company could lose money if a counterparty with which it trades becomes unwilling or unable to meet its obligations to the Company.
  • The return on your investment is directly related to the prevailing market price of the Company's shares, which will trade at a varying discount (or premium) relative to the value of the underlying assets of the Company. As a result losses (or gains) may be higher or lower than those of the Company's assets.
  • The Company may use gearing as part of its investment strategy. If the Company utilises its ability to gear, the profits and losses incured by the Company can be greater than those of a Company that does not use gearing.
  • All or part of the Company's management fee is taken from its capital. While this allows more income to be paid, it may also restrict capital growth or even result in capital erosion over time.
Jenna Barnard, CFA

Jenna Barnard, CFA

Co-Head of Global Bonds | Portfolio Manager


John Pattullo

John Pattullo

Co-Head of Global Bonds | Portfolio Manager


Nicholas Ware

Nicholas Ware

Portfolio Manager


24 Oct 2022
15 minute listen

Key takeaways:

  • Geopolitical tensions, elevated market volatility, and tightening monetary policy have engendered a difficult environment for fixed income investors.
  • We have been increasing our exposure to investment grade bonds whilst reducing our gearing, thereby reducing the overall risk of the portfolio. We continue to look for non-cyclical, modern day facing businesses with good free cash flow yield.
  • We see this as a time for caution and flexibility within the portfolio. However, higher yields are adding to the attractiveness of bonds and investors can potentially earn a higher income while pursuing resiliency during a period of high volatility.