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Investors Chronicle’s top 100 Funds 2020: Bonds

Biotech trust Trump benefit may be shortlived

Top 100 Funds 2020: Bonds

By Leonora Walters and David Baxter, Investors Chronicle, 11 Sept 2020

Many investors’ portfolios should have an allocation to assets other than equities for diversification. And with cash rates so low bonds can be a useful component in income portfolios. But although bonds can be less volatile than equities they are far from risk-free, so you need to be selective about the types of bond funds you invest in. For this reason, we continue to include many strategic bond funds in our selection. Their managers can invest across the fixed-income spectrum in an unconstrained way, focusing on the areas that look best and avoiding less desirable ones…

Henderson Diversified Income Trust (HDIV)

Henderson Diversified Income Trust invests in debt assets across the world including secured loans, government, high yield, unrated corporate and investment grade corporate bonds, and asset backed securities. It can also use derivatives to enhance returns and reduce risk.

It paid a dividend of 4.4p per share in respect of its last financial year and had a yield of 4.9 per cent at the end of July.

It is run by experienced fixed income managers Jenna Barnard and John Pattullo, co-heads of strategic fixed income at Janus Henderson.

At the end of June, it had 55.5 per cent of its assets in high yield and 37.5 per cent in investment grade corporate bonds.

The trust has performed well compared to many other debt focused investment trusts recently. “[It] has been doing well thanks to its focus on credit quality and – crucially – sectors and companies that have defensible business models,” says James Carthew, head of investment companies research at QuotedData…

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