In August 2020, the highly respected team of Lloyd Harris, Simon Prior and Rob James joined Premier Miton Investors from Merian Global Investors to build out the asset manager’s fixed income franchise.
In September, this led to the launch of the Premier Miton Strategic Monthly Income Bond Fund, managed by head of fixed income Harris and co-manager Prior.
Presenting the Premier Miton Strategic Monthly Income Bond Fund
We take a look at the portfolio from five angles with fund manager Lloyd Harris to see what investors can expect and how it can achieve a low correlation to other asset classes.
Asset class
Strategy
Philosophy
Diversification
Team
FOR PROFESSIONAL INVESTORS ONLY
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While the bias of the portfolio is to investment grade bonds, up to 60% can be invested in sub-investment grade bonds.
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Lloyd Harris, head of fixed income at Premier Miton Investors, says the aim of the Premier Miton Strategic Monthly Income Bond Fund is to provide investors with an income, which is achieved by investing in short duration credit.
“This short duration of the underlying collateral in the fund insulates investors from the volatility exhibited further out the yield curve in both credit and government bonds,” says Lloyd.
60%
Up to
can be invested in sub-investment grade bonds
The fund invests at least 70% in a diversified portfolio of company and government bonds.
Holding between 80 to 140 holdings, the fund can invest across all economic sectors, geographic regions and markets.
The fixed income team at Premier Miton follow three core principles in managing the fund; a focus on high quality, stable, investment grade and high yield companies, to provide downside protection and to give investors a genuine diversifier to equities.
“A hybrid of short duration investment grade and high yield names, it offers attractive yields and great opportunities for alpha generation,” says Harris.
70%
The fund invests at least
in company and government bonds
Harris and the team subsequently look for pricing anomalies within these markets and take profits when these anomalies have normalised, achieving consistent outperformance by adding incremental value through marginal gains. This leads to a highly active approach, in which turnover tends to be high.
Fund size
as at 30 June ’21
Harris says the fund’s investment philosophy is based on the belief that there is a huge breadth and depth of opportunities to drive returns in the credit market.
“The fund predominantly invests in global developed market credit and on any one day there can be 10, 20, maybe 30 new issues across euros, sterling and dollars which drive opportunities not only from the primary but secondary markets as well”, he says.
£112.4M
C Income share class as at 30 June ’21
3.16%
Distribution yield
Premier Miton also maintain a Responsible Investing Policy in which the consideration of Environmental, Social and Governance (ESG) factors alongside financial factors are embedded in investment decisions.
Investment-grade bonds
Harris says this is achieved by the mix of assets held within the fund; with the ability to hold investment grade, high yield and government bonds, and up to 20% in contingent convertible bonds (CoCos).
“Overall this mix, plus our shorter duration position, produces a low correlation to both the bond and equity markets and a relatively low volatility outcome for investors,” says Harris.
As at the end of June 2021, 59.1% of the fund was held in investment grade bonds and 22.5% was in high yield bonds.
59.1%
held as at 30 June '21
22.5%
High-yield
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With close to 15 years’ experience managing fixed income, Harris became lead manager of the Merian Corporate Bond Fund at the end of 2015. Lloyd launched the Merian Financials Contingent Capital Fund in August 2017 with Rob James and became lead manager of the Merian Monthly Income Bond Fund in February 2018.
Harris manages the fund alongside Simon Prior, who also joined from Merian and co-managed the Merian Corporate Bond and Merian Monthly Income Bond funds with Harris.
IMPORTANT INFORMATION
Alongside Harris and Prior, the Premier Miton fixed income team includes Rob James – who also joined from Merian – managers Chun Lee and Hoy Wan, and two credit analysts.
Harris says: “Simon has an unusual background for a credit investor in that he used to work for a treasury desk of a large life insurance company. This gives him unique expertise when looking at insurance companies, and when you put that together with the rest of the financials expertise we have in the team it gives us great depth in this part of the market.”
EXPERIENCE OF MANAGING FIXED INCOME
15 YRS'
Lead manager, Lloyd Harris has close to
The value of investments may fluctuate which will cause the value of a portfolio to fall as well as rise and investors may not get back the original amount invested. Government and corporate bonds generally offer a fixed level of interest to investors, so their value can be affected by changes in interest rates. When central bank interest rates fall, investors may be prepared to pay more for bonds and bond prices tend to rise. If interest rates rise, bonds may be less valuable to investors and their prices can fall.
Risks
Disclaimer
For Investment Professionals only. No other persons should rely on any information contained in this document. Whilst every effort has been made to ensure the accuracy of the information contained within this document, we regret that we cannot accept responsibility for any omissions or errors. The information given and opinions expressed are subject to change and should not be interpreted as investment advice. Reference to any particular stock or investment does not constitute a recommendation to buy or sell the stock / investment. All data is sourced to Premier Miton unless otherwise stated. Persons who do not have professional experience in matters relating to investments should not rely on the content of this document. For your protection, calls may be monitored and recorded for training and quality assurance purposes. A free, English language copy of the fund’s full prospectus, the Key Investor Information Document and Supplementary Information Document are available on the Premier Miton website, or you can request copies by calling us on 01483 306090. Financial Promotion issued by Premier Miton Investors. Premier Portfolio Managers Limited is registered in England no. 01235867. Premier Fund Managers Limited is registered in England no. 02274227. Both companies are authorised and regulated by the Financial Conduct Authority and are members of the ‘Premier Miton Investors’ marketing group and subsidiaries of Premier Miton Group plc (registered in England no. 06306664). Registered office: Eastgate Court, High Street, Guildford, Surrey GU1 3DE. 003164/200521
