Nomura Global Dynamic Bond

Nomura Global Dynamic is an unconstrained strategic bond fund, with a focus on total returns. It is managed by the charismatic Richard ‘Dickie’ Hodges, who blends two approaches when building his portfolio. First, he studies the state of the global economy and identifies which sectors and investment themes look most attractive. He then undertakes fundamental analysis, to populate his preferred areas with ideas. Dickie invests in the entire range of bond sectors including government bonds, corporate bonds, emerging market bonds and inflation-linked bonds. He can also use a variety of derivatives for dynamic portfolio construction and risk management.

Our opinion

A sector as vast as that of strategic bonds needs a manager who has the rare ability to accurately read the economic environment, as well as pick individual investments. Dickie Hodges has repeatedly shown he is capable of doing both. He is incredibly knowledgeable about bond securities and derivatives and uses this skillset and a flexible mandate, to exploit opportunities. Nomura Global Dynamic fund offers an excellent option for all market conditions in terms of both yield and capital return.

Fund manager

Dickie Hodges joined Nomura in 2014 from Legal & General, where he ran the similar L&G Dynamic Bond Trust from its inception in 2007. He was also head of high alpha fixed income. Prior to this, he was head of pan European portfolio construction at Gartmore Investment Management, where he ran a variety of European credit funds. He has also worked at Natwest Investment where he ran a number of specialist investment funds using derivatives and cash. Dickie started his career in 1986 at Chase Manhattan Bank in fixed income.

I am paid to take risk and earn attractive returns for my investors. But I absolutely refuse to do so without the flexibility to hedge against the very real dangers that fixed income investors face.

Dickie HodgesFund manager

Investment process

Dickie takes an unconstrained approach. He will utilise the full range of bond and derivative securities available to him to make a portfolio of diverse investment strategies. The goal is to deliver a yield well in excess of cash, but with capital growth too. He aims to do this whilst generating less volatility than bond indices.

Step one of the process is to build a medium-term view of the world. Dickie will want to understand the broad interest rate cycle and what the economic and corporate fundamentals are saying about the state of the world. Step two is to find any short-term opportunities that may exist. This step is designed to highlight idiosyncrasies in markets, including identifying areas of risk. This will throw up speculative positions in valuations, as well as seeing what catalysts could show signs of change. Step three is to identify the best securities to exploit such opportunities, judged on their risk and reward trade off.

ESG

ESG - Limited
There are no ESG-specific criteria applied to the fund and the portfolio manager has absolute discretion to invest in securities that either have poor ESG ratings or fall outside the analysts’ ESG coverage, which is in keeping with the unconstrained nature of the strategy. The global credit analysts do assign ESG ratings to the companies in their coverage, which have the ability to influence credit selection, but Nomura would not describe ESG inputs as material to the security selection process.

Risk

Risk measures are built into the portfolio management and construction throughout the process, ensuring that the Nomura Global Dynamic fund is not overly exposed to any one factor. There is an independent risk management team that will monitor the portfolio daily and report back any issues or exposure that has been taken, allowing Dickie to have a constant idea of what risk he has taken in the fund already, and where he can mitigate this if necessary. There is a maximum allowance of 20% cash, 30% emerging market debt, 20% convertible bonds and 10% foreign exchange. Dickie cannot hold direct equities in the portfolio but can use put options to take similar exposure if he sees fit.

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