Artemis Corporate Bond

This fund invests in investment grade corporate bonds, with some ability to allocate across the wider fixed income market. Stephen takes a long-term strategic and thematic view, but will also take advantage of short-term opportunities when they present themselves. Stephen and the team combine strong analysis of both the wider macroeconomic picture, and close examination of the fundamentals of corporate bonds, to produce a portfolio designed to weather any economic climate.

Our opinion

Stephen Snowden brings his considerable experience in investment grade fixed interest to bear on the Artemis Corporate Bond fund. He combines his knowledge and understanding of the macroeconomic backdrop with his credit analysis and technical understanding of the bond market. He and his team have a strong process and good track record investing in corporate bonds. We believe they can replicate this at Artemis.

Fund manager

Stephen began his career at Aegon Asset Management (now Kames Capital) in 1994, having obtained a BSc and an MSc in Finance from Queen’s University in Belfast. By 2000 he was managing Kames’ Sterling Corporate Bond fund. He moved to Old Mutual Asset Managers in 2004 to run their corporate bond fund, before returning to Kames as co-head of fixed income, co-managing Kames Investment Grade Bond fund, Investment Grade Global Bond fund, and the Absolute Return Bond fund in 2011. In 2019 Stephen joined Artemis from Kames Capital, bringing with him four other fixed interest team members.

We believe that corporate bond markets are inefficient and can be beaten. Inefficient markets create opportunities for active managers like my team to exploit.

Stephen SnowdenFund manager

Investment process

Stephen looks at the fundamentals of a company, taking into account where we are in the economic cycle, as well as the outlook for inflation and monetary and fiscal policies. He then analyses corporate profitability and management strategy, assessing whether it’s beneficial for bondholders. He looks at whether there are any factors hindering or improving the company’s competitive positioning and identifies any risks. Valuation then comes into play. How does the bond’s yield compare with others issued by the same company or those issued by its competitors?

Technical factors are then examined. For example, has a company previously over-borrowed, which has driven yields higher, and it’s now trying to repair its balance sheet? This should cause the bonds to recover as debt is reduced. Conversely, a company might be in strong financial shape but undertaking an ambitious merger and acquisition programme, which would increase its debt substantially.

Stephen also analyses whether a company or a sector is suffering from negative sentiment, which has suppressed prices further than the situation warrants, and assesses any structural changes that may materially impact certain sectors. He aims for diversification to avoid any unintended industry or name concentration.

Stephen and the team focus on UK, US and European issues, with at least 80% of their assets in sterling or hedged back to sterling.

ESG

ESG - Integrated  

Stephen acknowledges that ESG factors can be a material driver of company fundamentals and, as such, incorporates analysis of these factors into the process. This work is conducted by Artemis, rather than bought in from a third-party, and used in conjunction with the fundamental, technical and economic analysis already performed on a stock. Stephen believes this work is based around qualitative factors rather than providing a score, so he needs to integrate them within the stock analysis to ensure they are best captured in the overall analysis of a security. ESG factors are considered at both an individual stock basis and at a portfolio-wide level to ensure no unintended risks are systematically taken.

Risk

Artemis Corporate Bond fund is a reasonably diversified portfolio of 75-150 holdings. It will be invested largely across investment grade corporate bonds (80%), although Stephen can also invest in high yield, hard currency emerging market debt, government bonds and non-rated credit, depending on his view of the economic environment.

Stephen and his team undertake a stringent credit assessment of each company. They canvas a wide range of opinions and information sources to test their assumptions. Stephen is always mindful that growing shareholder value can come at the expense of bondholders, so the motives of the management team are carefully scrutinised.

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