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A-Grade Renaissance Global Bond Fund a compelling choice
10/16/2018 8:13:51 AM
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DUE DILIGENCE
Objective research, analysis, and insight on investment funds in Canada from an acknowledged industry expert



By Dave Paterson  | Wednesday, May 23, 2018


 



With Canadian interest rates likely moving higher in the next few months, many investors are looking for fixed-income exposure outside of Canada. The actively managed Renaissance Global Bond Fund is one of the more compelling choices available in the Global Fixed Income space.

The fund is managed by David Hoffman and Stephen Smith of sub-advisors Brandywine Global Investment Management, based in Philadelphia, PA, using a value-based approach by which they screen for securities that offer the highest real yield and that are trading at discounted valuations. Their process starts with a top-down macro analysis that scans the globe looking for attractive real yields and currencies that can benefit from the economic environment. They then look for attractive points on the yield curve that will allow for profit opportunities.

The managers are very active in their approach, and their positioning across securities, countries, and currencies will change frequently. Unlike some of their global bond peers, Hoffman and Smith focus more on government bonds, and only occasionally invest in credit. They will also manage currency exposure as a profit center.

At the end of March, the fund was defensively positioned, with a yield to maturity of 3.6% and a duration of approximately 3.2 years for the portfolio. This is higher than what is offered by the Canadian bond market. Geographically, as of April 30, the fund was weighted 52.6% to North America, 15.4% to Asia, 14.3% to Latin America, and 1.2% to Europe, with a smattering of other global issues filling out the balance.

Performance, particularly over the long-term, has been strong. For the five years ending April 30, the fund posted an average annual 5-year compounded rate of return of 5.2%, placing it in the first quartile of performance. Year-to-date, the fund is up 3,4%, well above the category average.

However, the fund is not without its drawbacks. It has historically been more volatile than many of its global bond peers and Canadian-focused bond funds, with a 3-year average standard deviation of 6.12% as of April 30. It is running at a level of volatility that is nearly twice that of the FTSE TMX Bond Universe. It is also somewhat pricey, with an MER of 2.08.

Renaissance Global Bond Fund
Fund company:
CIBC Asset Management
Fund type: Global Fixed Income
FundGrade Rating: A (April)
Style: Top-down value
Risk level: Low-Medium
Load status: Optional
RRSP/RRIF suitability: Good
Manager: David Hoffman since Nov. 2006; Stephen Smith since Nov. 2006
MER: 2.08%
Fund code: ATL1028 (Front-end load)
Minimum investment: $500

Dave Paterson, CFA, is the Director of Research, Investment Funds for D.A. Paterson & Associates Inc., a consulting firm specializing in providing research and due diligence on a variety of investment products. He is also the publisher of Dave Paterson’s Top Funds Report, offering regular commentary and in-depth analysis of Canada’s top investment funds. He uses a unique analytical approach to identify funds with strong, risk-adjusted returns, and regularly publishes his insights and analyses in Fund Library.

Notes and Disclaimer

© 2018 by Fund Library. All rights reserved. Reproduction in whole or in part by any means without prior written permission is prohibited.

Commissions, trailing commissions, management fees and expenses all may be associated with fund investments. Please read the simplified prospectus before investing. Mutual funds are not guaranteed and are not covered by the Canada Deposit Insurance Corporation or by any other government deposit insurer. There can be no assurances that the fund will be able to maintain its net asset value per security at a constant amount or that the full amount of your investment in the fund will be returned to you. Fund values change frequently and past performance may not be repeated. No guarantee of performance is made or implied. This article is for information purposes only and is not intended as personalized investment advice.

 

 
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