Monthly fund manager comment

30/06/2018

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Macro backdrop

?It feels definitively late in the economic cycle to us. We observe record levels of merger and acquisition (M&A) and leveraged buyout (LBO) activity, a flattening yield curve, a strong oil price and a strong dollar, in addition to an increasingly narrow sector leadership in US equities. Global growth has peaked and inflation is peaking. The US Federal Reserve (Fed) continues to tighten interest rates, as it remains focused on domestic issues for the moment, albeit causing funding pain in the emerging markets. Meanwhile, the European Central Bank (ECB) President announced a cautious exit from quantitative easing while stating European interest rates will not rise until through the summer of 2019! The BIS Sintra meeting focused heavily on the puzzle of limited global wage growth and the fact it was not getting passed on - something we have highlighted many times. We have concerns regarding the weakness of the growth in global money supply and are very focused on the spill-over effects of US monetary policy on global risk markets. The chance of the Fed securing a soft landing seems very low to us.

Fund performance and activity

The fund performed reasonably well, returning 0.1%, against an uninspiring backdrop where most bond markets were flat or fell marginally. US investment grade bonds were weak given a barrage of late cycle M&A supply re-pricing secondary price levels. US high yield bonds achieved a positive return given higher starting yields and less supply pressures. The fund is more exposed to high yield bonds versus investment grade bonds and this was beneficial to performance. The US investment grade non-financial book was disappointing and we have cut back some of this exposure during the year. Loans continue to hold up well although we are wary of deteriorating new issue trends. We found trading sovereign bonds harder than prior months given some confusing comments and emphasis by some officials at the ECB. In terms of activity, we did find some value in front end American corporate bonds and some Australian sovereign bonds while we selectively trimmed holdings in the odd financial name.

Outlook/strategy

Bond markets have so far been fairly challenging for income investors this year after an exceptionally strong 2017. We may have been through the worst of the inflation breakout fears and we have more concern about a slowdown in growth and the impact that could have on risk assets, than the risk of overheating. We continue to focus on investing at sensible yields in predominately large cap, non-cyclical, reason to exist credits. We look to seek out companies with sustainable cash flows in order to generate the monthly income for our investors. At this time in the cycle this may involve a degree of capital volatility but hopefully not destruction. The remainder of 2018 could well present some interesting bond opportunities if growth slows as we expect.


Past performance is not a guide to future performance. 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.

Any stock examples are for illustrative purposes only and are not indicative of the historical or future performance of the strategy or the chances of success of any particular strategy. Janus Henderson Investors, one of its affiliated advisors, or its employees, may have a position in the securities mentioned in the report. References made to sectors and stocks do not constitute or form part of any offer or solicitation to issue, sell, subscribe, or purchase them.

These are the fund manager’s views at the time of writing and should not be construed as investment advice.

Source: Janus Henderson Investors. Based on published NAV, net of fees, costs and other charges, but does not include initial charge if applicable.

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Janus Henderson Fixed Interest Monthly Income Fund

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Past performance is not a guide to future performance. 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. Tax assumptions and reliefs depend upon an investor’s particular circumstances and may change if those circumstances or the law change.

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Copies of the Fund’s prospectus are available in English, French, Spanish German and Dutch. Key investor information documents are available in English, Danish, German, Finnish, French, Italian, Norwegian, Spanish, Swedish and Dutch. Articles of incorporation, annual and semi-annual reports are available in English. All of these documents can be obtained free of cost from the local offices of Janus Henderson Investors: 201 Bishopsgate, London, EC2M 3AE for UK, Swedish and Scandinavian investors; Via Dante 14, 20121 Milan, Italy, for Italian investors and Roemer Visscherstraat 43-45, 1054 EW Amsterdam, the Netherlands. for Dutch investors; and the Fund’s: Austrian Paying Agent Raiffeisen Bank International AG, Am Stadtpark 9, A-1030 Vienna; French Paying Agent BNP Paribas Securities Services, 3, rue d’Antin, F-75002 Paris; German Information Agent Marcard, Stein & Co, Ballindamm 36, 20095 Hamburg; Belgian Financial Service Provider CACEIS Belgium S.A., Avenue du Port 86 C b320, B-1000 Brussels; Spanish Representative Allfunds Bank S.A. Estafeta, 6 Complejo Plaza de la Fuente, La Moraleja, Alcobendas 28109 Madrid; Singapore Representative Henderson Global Investors (Singapore) Limited, 138 Market Street #34-03/04 CapitaGreen, Singapore 048946; or Swiss Representative BNP Paribas Securities Services, Paris, succursale de Zurich, Selnaustrasse 16, 8002 Zurich who are also the Swiss Paying Agent.

Specific risks

  • Investment management techniques that have worked well in normal market conditions could prove ineffective or detrimental at other times.
  • Some or all of the annual management charge is taken from capital. This may constrain potential for capital growth.
  • This fund is designed to be used only as one component in several in a diversified investment portfolio. Investors should consider carefully the proportion of their portfolio invested into this fund.
  • The Fund could lose money if a counterparty with which it trades becomes unwilling or unable to meet its obligations to the Fund.
  • The value of a bond or money market instrument may fall if the financial health of the issuer weakens, or the market believes it may weaken. This risk is greater the lower the credit quality of the bond.
  • Derivatives use exposes the Fund to risks different from, and potentially greater than, the risks associated with investing directly in securities and may therefore result in additional loss, which could be significantly greater than the cost of the derivative.
  • Changes in currency exchange rates may cause the value of your investment and any income from it to rise or fall.
  • If the Fund or a specific share class of the Fund seeks to reduce risks (such as exchange rate movements), the measures designed to do so may be ineffective, unavailable or detrimental.
  • When interest rates rise (or fall), the prices of different securities will be affected differently. In particular, bond values generally fall when interest rates rise. This risk is generally greater the longer the maturity of a bond investment.
  • Leverage arises from entering into contracts or derivatives whose terms have the effect of magnifying an outcome, meaning profits and losses from investment can be greater.
  • Any security could become hard to value or to sell at a desired time and price, increasing the risk of investment losses.

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