IC decisions
Implementation recommendations
Investment Solutions - Investment Committee
 
 
Location External Use Details
LO CH For internal use only
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LO Asia For internal use only
Other Ext. Offices For internal use only
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Dear Investors,

As a follow-up to the latest Investment Committee Update, we would like to highlight the following implementation solutions:

Global High Yield Corporate Bonds across all profiles

For investors looking to increase their exposure to Global High Yield Corporate Bonds, we suggest the following options:

  • Global solutions

1. Active Strategy

Robeco High Yield Bonds Link to factsheet

The fund invests globally in high-yield corporate bonds, mainly from US and European issuers. The fund tends to have a high quality bias with typically an overweight in BBs. As of August 2019:

Yield to worst (in USD): 4.5%
Effective duration: 2.9 years
Average credit rating: BB

2. Passive strategy

iShares Global High Yield Corp Bond UCITS ETF (factsheets attached)

iShares Global High Yield Corp Bond UCITS ETF (Acc)
iShares Global High Yield Corp Bond UCITS ETF (Dis)
iShares Global High Yield Corp Bond UCITS ETF EUR Hedged (Dis)
iShares Global High Yield Corp Bond UCITS ETF CHF Hedged (Acc)
iShares Global High Yield Corp Bond UCITS ETF GBP Hedged (Dis)

The fund physically replicates the Markit iBoxx Global Developed Markets Liquid High Yield Capped Index, offering in one single transaction direct investment to 1’437 sub-investment grade rated bonds (known as high yield bonds) across developed countries and all sectors. Currency risk is reduced through BlackRock’s FX daily hedging with thresholds across hedged-share classes.

Yield to Maturity

Unhedged 4.99%
EUR Hedged 3.19%
CHF Hedged 2.79%
GBP Hedged 4.51%
Effective duration: 3.01 years
Average credit rating: B1/BB-/BB (M/S/F)

In terms of execution, block trades are highly recommended due to the liquidity of the underlying market.

  • Regional solutions

3. Active strategy

PrivilEdge – T Rowe Price European  High Yield Bond (European HY) Link to factsheet

The fund mainly invests in bonds denominated in EUR issued by high-yield corporates. The fund tends to have a low quality bias with an overweight in single B issuers as this is where the portfolio manager finds the best opportunities. As of September 2019:

Yield to worst (in EUR): 4.39%
Modified duration: 2.18 years
Average credit rating: B+

PrivilEdge – Columbia US Short Duration High Yield (US short-duration HY) Link to factsheet

The fund invests in short-maturity bonds denominated in USD issued by high-yield corporates, mostly based in the US. The fund has a very defensive profile due to the short-term nature of these bonds but also due to the style of the manager, with a clear bias in selecting BB issuers. As of August 2019:

Yield to worst (in USD): 2.89%
Effective duration: 1.06 years
Average credit rating: BB-

Muzinich Americayield (US HY) Link to factsheet

The fund invests in bonds denominated in USD issued by high-yield corporates, mostly based in the US. The fund invests in the full maturity spectrum but has a defensive bias as it excludes CCCs issuers. As of August 2019:

Yield to worst (in USD): 4.95%
Effective duration: 2.94 years
Average credit rating: B+

Nomura High Yield Bond (US HY) Link to factsheet

The fund invests in bonds denominated in USD issued by high-yield corporates, mostly based in the US. The fund invests in the full maturity spectrum and the full credit quality spectrum, including CCCs. As of August 2019:

Yield to worst (in USD): 6.47%
Effective duration: 2.98 years
Average credit rating: B+

 

Best regards,

Investment Committee

 
 

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