Artemis Strategic Bond Fund
Fund Manager's Comment
Data as at 30 April 2012
The markets remain very febrile with news from Europe leading to bouts of extreme fear. This has affected turnover and liquidity in the entire market, which is lower than usual. Partly this is because banks are reducing their appetite for risk, the inevitable consequence of banks deleveraging. We continue to hold our German government bunds, as a result, but accept that yields of 1.7% are hardly exciting. In time, we would look to sell this position but only when we see better signs of economic growth.
The result is that companies equally remain cautious, which continues to be a positive for the credit markets. Balance sheet strength remains a priority for companies who are not taking on significant risk given the economic background. Yields remain low and even a BBB-rated company such as G4S was able to raise funds at 2.875% (admittedly in euros) for five years. We believe it is likely that yields will stay low for some time to come.
High yield markets are choppy, but those high yields are attracting new cashflow from income seekers. The high yield market, despite the macroeconomic uncertainties, is further supported by companies prioritising cash flow management. We will look to the bouts of weakness to increase our exposure.
Government Bonds
A good month for government bonds as fears increased about the euro. Peripheral government bond yields (and especially Spain’s) rose sharply, though, as concerns intensified about excess government debt.
Investment grade
A mixed bag with bank and insurance bonds performing poorly, but the low risk corporate bonds remaining very stable.
High Yield
Poor equity markets didn’t help the tone. But high yield cash markets remain remarkably well supported given the economic background, and have performed better than you might have expected.
A busy month with the volatility in the markets creating some opportunities. We increased our holdings in German bunds which has helped performance. Further we invested new cashflow into some of the new issues which emerged. There weren’t many, but Direct Line, the insurance group, issued some junior bonds in anticipation of their flotation and demerger from RBS in the next year. We felt the coupon of 9.375% was attractive. We also topped up on existing positions in EnBW. Later in the month, we had a tender for our Bank of America bonds.
Fund Manager
James Foster
Manager of the Artemis Strategic Bond Fund Fund since launch
Co-Fund Manager
Alex Ralph
Co-Manager of the Artemis Strategic Bond Fund Fund since launch
Awards
Strategic Bond PDFKey Facts
| IMA Sector | £ Strategic Bond |
|---|---|
| Sedol - Quarterly Dist | B09DMK3 |
| Sedol - Quarterly Acc | B09DMJ2 |
| Fund Size (offer basis) | £552.4m |
| Distribution yield | 4.8% |
| Unit offer price (Class Q dist. units) | 52.25p |
| Unit bid price (Class Q dist. units) | 49.13p |
| Unit offer price (Class Q acc. units) | 71.88p |
| Unit bid price (Class Q acc. units) | 67.58p |
| Valuation (UK business days) | 12:00 |
| Minimum lump sum investment | £1,000 |
|---|---|
| Minimum monthly investment | £50 |
| Launch | 1 June 2005 |
| Launch price | 50p |
| Preliminary charge | 5.25% |
| Annual Management Fee | 1.00% |
| Unit type | Distribution & Accumulation |
| Distribution pay dates (Class Q units) | 30 Apr, 31 Jul, 31 Oct, 31 Jan |
| Year end | 31 March |
| Total Expense Ratio | 1.09% |
Data as at 30 April 2012. Class M units are available for investments over £25,000. For more information, please contact us.
Performance
| Since Launch* | 5 Years | 3 Years | 1 Year | 6 Months | |
|---|---|---|---|---|---|
| Strategic Bond Fund (TR)† | 35.2 | 20.8 | 53.9 | -0.8 | 4.3 |
| Markit iBoxx Sterling non gilts (TR)† | 34.1 | 29.0 | 37.2 | 6.4 | 3.0 |
| Sector Average | 21.6 | 16.3 | 39.4 | 2.8 | 3.5 |
| Position in Sector | 4 | 21 | 21 | 53 | 23 |
| Funds in Sector | 36 | 44 | 57 | 66 | 67 |
| Quartile | 1 | 2 | 2 | 4 | 2 |
Please remember that past performance is not a guide to the future.
* Data from 30 June 2005, due to the fixed price period of the fund. Source: Lipper Limited, bid to bid in sterling with net income reinvested to 30 April 2012. All figures show total returns. †Percentage Growth. Sector is IMA £ Strategic Bond.
Percentage Growth
Artemis Strategic Bond Fund Fund 12 Months to 31 December 2009
| 2012 | 2011 | 2010 | 2009 | 2008 |
|---|---|---|---|---|
| 1.1 | 8.1 | 49.6 | -20.3 | -6.6 |
Source: Lipper Limited, bid to bid in sterling with net income reinvested. All figures show total returns.
Value of £1,000 invested at Launch to 30 April 2012.
Data from 30 June 2005, due to the fixed price period of the fund. Source Lipper Limited, bid to bid in sterling with net income reinvested to 30 April 2012.
Asset Allocation*
*Without cash. Source: Internal
Top Ten Holdings*
| Bundesrepub. Deutschland 2% 2022 | 7.7% |
|---|---|
| RWE AG 7% PERP | 1.7% |
| Eksportfinans MTN BE NT FLT 13 05/APR/2013 | 1.7% |
| Taylor Wimpey 10.375% 2015 | 1.7% |
| IPIC GMTN Ltd 5.875% 2021 (EUR) | 1.6% |
| GE Capital Trust V | 1.6% |
| BAA 7.125% 2017 | 1.6% |
| Cable & Wireless 8.625% 2019 | 1.6% |
| Imperial Tobacco Finance 5.5% 2016 | 1.6% |
| Bank of America 5.25% 2016 | 1.5% |
* Without cash.
Source: Internal.
Market Sector Split*
| Financial Services | 14.6% |
|---|---|
| Banks | 14.2% |
| Insurance | 10.2% |
| Utilities | 9.4% |
| Telecommunications | 9.2% |
| Travel & Leisure | 9.1% |
| Industrial Goods & Services | 7.1% |
| Media | 6.2% |
| Personal & Household Goods | 4.6% |
| Other | 15.4% |
* Without cash.
Source: Internal.
Risk Warning
Issued by Artemis Fund Managers Limited, which is authorised and regulated by the Financial Services Authority (www.fsa.gov.uk), 25 The North Colonnade, Canary Wharf, London E14 5HS and is a member of the IMA. Artemis Fund Managers Limited is a member of the Artemis Marketing Group. We only market our own unit trusts. The value of an investment and any income from it can fall as well as rise as a result of market and currency fluctuations and you may not get back the amount originally invested. In order to offer a higher yield, a proportion of the Artemis Strategic Bond Fund will be invested in higher risk securities that may increase the risk to your capital. In particular, there can be no assurance that capital appreciation will occur in the early years as initial charges are levied on your investment and charges are not made uniformly throughout the life of your investment. Investments in fixed interest securities and bonds are subject to credit and market risk. The value of the underlying assets and therefore the value of units in this Fund will be impacted by fluctuations in interest rates and the perceived credit risk of an issuer.
All data is sourced internally unless otherwise stated.
The distribution yield reflects the amounts that may be distributed over the next twelve months as a percentage of the mid-market unit price of the fund as at the date shown. It does not include any preliminary charge and investors may be subject to tax on distributions. The distribution yield is also the underlying yield for the fund.
