CQS New City High Yield – “Conservative and boring” – In the words of its manager, Ian Francis, CQS New City High Yield Fund (NCYF) is “really conservative and boring”! However, NCYF offers a high yield and has beaten the consumer price index, Libor and the MSCI UK Index by significant margins over the last 10 years; all while providing low volatility returns. Furthermore, its premium rating (an average of 5.5% during the last year) and its ongoing share issuance (5.3% during the last year) suggest that investors are attracted to the fund.

Ian is able to draw on the resources of CQS, which has its own methodology to analyse and rate any bond. Ian describes this as NCYF’s ‘secret sauce’. It allows the portfolio to invest in bonds issued by companies out of the mainstream and that have not been rated by the major ratings agencies. These bonds typically earn a premium of 1.5%-2.0% to an equivalent rated bond with the same level of risk.

High dividend yield and potential for capital growth

NCYF aims to provide investors with a high dividend yield and the potential for capital growth by investing mainly in high yielding fixed interest securities. These include, but are not limited to, preference shares, loan stocks, corporate bonds (convertible and/or redeemable) and government stocks. The company also invests in equities and other income yielding securities. The manager has a strong focus on capital preservation and is conservative in its approach to growing NCYF’s size.

NCYF – CQS New City High Yield – “Conservative and boring”