Man Dynamic Income
Previously the Man GLG Dynamic Income fund
Jonathan Golan has had an incredible first 10 years to his career managing corporate bond funds. This new fund, which sits in the strategic bond sector, gives him even greater flexibility to pursue his best ideas. The fund has the added ability to buy high yield, emerging markets and government bonds. The fund typically avoids low yielding higher quality bonds, which the manager believes are riskier to hold.
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Jonathan Golan, Lead Manager Jonathan Golan is a portfolio manager at Man GLG, specializing in corporate bond and dynamic credit strategies. He joined Man GLG in July 2021, after serving as a fund manager at Schroders, where he worked from 2013. Jonathan holds an MSc in Financial Economics from Oxford University and a BA in Economics from The Hebrew University.
Jonathan Golan, Lead Manager Jonathan Golan is a portfolio manager at Man GLG, specializing in corporate bond and dynamic credit strategies. He joined Man GLG in July 2021, after serving as a fund manager at Schroders, where he worked from 2013. Jonathan holds an MSc in Financial Economics from Oxford University and a BA in Economics from The Hebrew University.
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Investment process
The core of the process focuses on value and risk. The strategy’s ultimate goal is to build a portfolio of individual uncorrelated ideas with excellent risk reward characteristics.
The investment philosophy has three pillars:
- Margin of Safety
- Alpha not Beta
- Small is Beautiful
Margin of Safety - The team undertake a huge amount of bottom up credit research to identify bonds where default risks are greatly overstated. In this way they are able to buy bonds with high yields but low risk.
Alpha not Beta – The fund focuses on individual ideas and individual credit improvement stories. These are typically uncorrelated to the macro cycle. The resulting portfolio has multiple uncorrelated drivers and is less dependent on market beta allowing it to perform in different environments.
Small is Beautiful – Larger issuers tend to have worse/risk reward. The best opportunities are to be found in the small and mid cap issuers which are often under researched.
The fund process starts with a valuation screen. The team focuses on market segments with attractive pricing and is also constantly on the lookout for interesting special situations. Valuation is a function of price and risk. Price is very important in fixed income because the annual expected return of the bond is known at the outset. The team avoid buying expensive bonds in high-quality companies. They believe low yielding bonds tend to be riskier investments. Risk is critical and the team never buy or sell bonds solely based on price.
Once an issuer is chosen for further research a risk assessment is undertaken. This includes; building internal financial models, business analysis, legal analysis and ESG risk. The team rigorously analyse the credit risk of every company in their universe. The team focus on financial accounts over management presentations.
The fund then only invests in issuers where the yield greatly overstates the risk of default. When a bond hits fair value it will be sold to make way for new ideas. This is an active fund which will trade to take advantage of opportunities. The final portfolio typically holds 100-120 issuers.
Risk
The fund has greater flexibility and conviction which may lead to greater risk but also gives the manager more tools to protect the portfolio in some scenarios. The fund also has a lower duration reducing its sensitivity to interest rates risk relative to the corporate bond fund.
ESG
ESG is an important part of the fund’s risk assessment for individual companies and ESG research is conducted to ensure a strong alignment of interests. The fund does not have a sustainable investment objective, nor does it embrace investment in assets with environmental or social benefits.
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