Risk-management tools include duration management, country and yield curve
positioning, sovereign bonds, and credit allocations, as the fund blends
top-down macro analysis with bottom-up security selection, also
incorporating socially responsible investing criteria.
Their top-down macro analysis takes a directional and relative value view
on government and corporate bond issues, helping the managers zero in on
the best opportunities and create a model portfolio. The bottom-up security
selection process looks for bonds or derivatives that will provide what
they believe to be the most effective exposure based on their model.
As of Sept. 30, about 53% of the portfolio was weighted to government
bonds, with corporates at 38% (including about 12% in high-yield issues).
At Sept. 30, about 45% of the portfolio was invested in North America and
44% in Europe, making this a truly global option.
Over the past three years to Sept. 30, the fund posted a modest average
annual compounded rate of return of 1.3%, as rising yields through 2018
have acted as headwinds. In calendar 2017, however, the fund gained 4.31%,
outstripping benchmarks, and its 5-year average annual compounded rate of
return to Sept. 30 was 2.6%.
The fund’s volatility profile is well below the broader markets and peer
group, and it has done an excellent job protecting capital in down markets.
For the three years ending Sept. 30, it participated in less than 10% of
the downside of the Bloomberg Barclays Global Aggregate Index.
This fund is shaping up to be a lower-volatility way to play global bonds.
It provides exposure across a wide range of geographic sectors and credit
qualities. While not my favourite fund at the moment, it is one certainly
worth keeping an eye on.
NEI Global Total Return Bond
Global Fixed Income
Top-down macro, Bottom-up security selection
since Apr 2014,
since May 2015
NWT194 (Front-end load)
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
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.
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only and is not intended as personalized investment advice.