Market Review
European corporate bond markets retreated in April, and the effect of the European Central Bank's long-term refinancing operation appeared to be waning. Financial sector bonds were the worst performers and Euro bonds outperformed their sterling-denominated counterparts. Meanwhile, high yielding bonds were largely unchanged.
Fund Performance
The Fund continues to hold core financial names at the expense of peripheral banks. This cost the Fund as peripheral names continued to outperform. Our holding in Repsol was a negative contributor but was offset by the exposure to Telecom Italia.
Fund Positioning
We participated in a new issue from G4S, and sold automobile group BMW in favour of Daimler. The rationale was that BMW's Chinese sales growth is slowing while Daimler's product renewal phase should boost sales. During April, the Fund switched from an over five years benchmark to the Euro Corporate All Maturities index.
Daniel McKernan & Mark Munro
30 April 2012