TwentyFour Corporate Bond
TwentyFour Corporate Bond fund looks to achieve the highest possible income with the least amount of volatility. It does so using an impressive quantitative investment tool, the ‘Observatory System’, which results in a concentrated number of holdings. Because of its focus on minimising risk, the fund mostly holds investment-grade bonds. However, it will also selectively hold high yield or floating rate bonds.
Our Opinion
Fund Manager
Fund Manager
Chris is a partner at TwentyFour, having joined in September 2014 to establish and manage the Outcome and Index Driven business line, which focuses on interest rate sensitive bonds and active duration management. He is the lead manager for the Corporate Bond Fund and Absolute Return Credit Fund, and also serves on the firm’s Investment Committee and ESG Steering Group. With 27 years of experience in fixed income markets, Chris was previously Head of Credit at Ignis, Head of Rates at AEGON (now Kames), and a senior portfolio manager at Murray Johnstone Ltd, which was acquired by Aberdeen Asset Management.
Fund Performance
Risk
Quote from the Fund Manager
I like good yielding bonds that won’t give me sleepless nights – investment grade bonds are meant to be boring after all. And no, I’m not related to David.
Chris Bowie
Lead Manager
Investment process
TwentyFour Corporate Bond fund is constructed using a total return mindset, rather than just focusing on making the most income possible. Chris will have a mixture of around 80% investment grade and 20% high yield or floating rate notes in the fund at any one time. Within the investment grade section, there will be a strong weight to government bonds and supranationals (such as the European Union or the World Trade Organisation). To find his holdings, Chris uses a bespoke quant research tool: Observatory System. This is designed to seek out the best risk-adjusted opportunities. The fund will only hold a maximum of 100 stocks at any one time, so that he can let the benefits of good stock selection shine through. At this level Chris believes he can outperform, as he can fully analyse and understand every single holding.
Risk
Chris prides himself on his high risk-adjusted returns. TwentyFour Corporate Bond fund has limits on the number of positions it can take to ensure the portfolio risks are understood and managed. When analysing these stocks, liquidity is considered very important, so that Chris can easily exit a position if an investment case deteriorates. This means risk can be managed and existing shareholders have a good level of protection. The process focuses on total returns, meaning Chris isn't sacrificing growth to artificially boost the yield, nor is he taking part in high-risk growth ideas. These stocks will all be public and will all have ratings from one of the main agencies. Because of this level of risk management, Chris has never had a default in running the fund. This has led to the best risk-adjusted returns in the sector.
ESG
ESG - Integrated
TwentyFour has a robust ESG framework which is integrated throughout the investment process for its funds. With this fund, Chris and his team are directly responsible and accountable for the analysis: there is no reliance on third party analysts or a separate ESG team within the firm.
As a specialist fixed income investor, the priority is to ensure bond coupons and principals are paid, and the team sees ESG as a risk to this goal like any other. All ESG factors are considered, however Chris has a particular focus on governance with this fund. The ESG integration model also incorporates more nuanced factors such as controversies, engagement and momentum, which Chris feels best reflects TwentyFour’s approach as an active manager. This means that ESG analysis is embedded into every stage of the investment process, to achieve two main objectives: enhancing investor returns, and playing its part in promoting better societal and environmental outcomes.