The objective of the Fund is to provide a combination of income and growth over the long term above that of the ICE BofA BB-B Global High Yield Non-Financial 2% Constrained Total Return Index (Hedged to USD), the “Benchmark Index”. The Fund is actively managed and aims to outperform the Benchmark Index by 1% per annum. This objective is before the deduction of any charges and measured over rolling three year periods. There can be no assurance that the Fund will achieve its investment objective.
Martin Reeves graduated with an MA in economics from St. Catherine’s College, University of Cambridge. He started his career at Ernst & Young where he qualified as a chartered accountant and worked within the capital markets group. Martin went on to join UBK Asset Management where he was the head of the US based high yield research team. In 1988 he joined Alliance Bernstein where he started as the director of European credit research and in 2002 he worked as director of research for the Asia Pacific team before becoming director of the European fixed income business unit in 2004. He then became director of global credit research, and has managed fixed income funds for over 19 years. Martin joined Legal & General Investments in September 2011 as head of high yield and took over the Legal & General High Income Trust.
Performance is for the period shown (month end to month end, bid/bid, gross income reinvested, calculated in the currency and currencies indicated).
Latest L&G Global High Yield Bond Fund News
Fund Launches22, February 2024Story By Fenella Rhodes
LGIM launches trio of high yield bond funds
The fund firm has launched US, Euro and emerging market high yield bond funds focusing on the higher-quality segment of the market, just below investment grade level.
The Global High Yield Bond Fund seeks to maximise total return. The Fund invests globally at least 70% of its total assets in high yield fixed income transferable securities.
The interest and dividends from high-yield bonds is taxed in the same manner as any other type of taxable interest or dividend that is paid from corporate bonds. There may be OID issues in some cases, and capital gains and losses may be realized for those who trade these securities in the secondary market.
What are the risks? Compared to investment grade corporate and sovereign bonds, high yield bonds are more volatile with higher default risk among underlying issuers. In times of economic stress, defaults may spike, making the asset class more sensitive to the economic outlook than other sectors of the bond market.
High-yield bonds face higher default rates and more volatility than investment-grade bonds, and they have more interest rate risk than stocks. Emerging market debt and convertible bonds are the main alternatives to high-yield bonds in the high-risk debt category.
US High Yield B Effective Yield is at 7.72%, compared to 7.53% the previous market day and 8.66% last year. This is lower than the long term average of 8.49%.
Meketa Investment Group recommends that most diversified long-term pools consider allocating to high yield bonds, and if they do so, between five and ten percent of total assets in favorable markets, and maintaining a toehold investment even in adverse environments to permit rapid re-allocation should valuations shift.
But high-yield mutual funds and ETFs also come with risks. For instance, if a number of investors want to cash out their shares, the fund might have to sell assets to raise money for redemptions. The fund might have to sell bonds at a loss, causing its price to fall.
A high-yield bond, or junk bond, is a corporate bond that represents debt issued by a firm with the promise to pay interest and return the principal at maturity.
Key takeaways. Buying individual bonds can provide increased control and transparency, but typically requires a greater commitment of time and financial resources. Investing in bond funds can make it easier to achieve broad diversification with a lower dollar commitment, but offers less control.
Bonds, especially government and reputable corporate bonds, are often perceived as less risky than equities. Their returns are usually fixed and predictable. Mutual funds, especially equity-oriented ones, can be more volatile, with returns subject to market fluctuations.
Treasuries are generally considered"risk-free" since the federal government guarantees them and has never (yet) defaulted. These government bonds are often best for investors seeking a safe haven for their money, particularly during volatile market periods. They offer high liquidity due to an active secondary market.
Looking at the asset class's historical performance leads us to believe that high yield is poised to produce a positive return in 2024, albeit not as robust as that experienced in 2023. We believe that the economy is not rolling over and that a recession is likely to be at least six months away.
Junk-bond ETFs showed a slight uptick, suggesting potential outperformance in 2024, especially under a soft-landing scenario for the US economy, according to Michael Arone of State Street Global Advisors.
Introduction: My name is Nicola Considine CPA, I am a determined, witty, powerful, brainy, open, smiling, proud person who loves writing and wants to share my knowledge and understanding with you.
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