BlueBay Investment Grade Bd M EUR |
by Evangelia Gkeka
BlueBay Investment Grade Bond benefits from continuity in both its consistent investment approach and the experienced portfolio management team. The Morningstar Medalist Rating for the strategy’s clean share class (C EUR) remains at Bronze. Other share classes are rated between Silver and Neutral, depending on fees. Marc Stacey and Tom Moulds are co-leads, while Andrzej Skiba has been involved in the US' bottom-up and top-down calls since 2008. Stacey joined BlueBay in 2004 and became comanager here in August 2013, while Moulds joined in 2005 and became comanager in 2016. Raphael Robelin was lead portfolio manager from November 2003 until December 2017. He gradually became less involved in day-to-day management from 2013 when he became co-CIO. In 2015, when Robelin was appointed sole CIO, day-to-day portfolio management was transferred to the current team. The strategy aims to outperform the iBoxx Euro Corporate Index by 150 basis points per year before fees, with a credit alpha security selection target of 100 basis points and top-down drivers such as term structure (duration management using interest-rate futures and swaps) and credit beta (using credit default swaps) targeting 25 basis points alpha each. Duration is kept within a year of the benchmark's. The investment process utilises a wide range of internal resources, including three portfolio managers, each specialising in a particular credit sector; six macro specialists supporting the top-down calls; and nine experienced credit analysts. The complementary skill sets of the portfolio managers combined with the level of experience and active involvement with the analyst teams across research, idea generation, and specific trade recommendations drive our positive view here. Since 2013, when two of the three portfolio managers took over, up to end March 2023 the strategy outperformed its peers on an absolute and risk-adjusted basis. It also outperformed its EUR corporate bond Morningstar Category index over the period, while its risk-adjusted returns have been in line with the category index's. After underperforming during the 2014-16 period, relative performance significantly improved in subsequent years as the strategy recorded top-quartile performance in 2017, 2019, 2020 and 2021. In 2022 the strategy declined by 14.5% and lagged its peers by 1.2% and the category index by 0.9%. Main detractor was credit beta as the strategy's long risk profile on a beta-adjusted detracted during the sharp market selloff. Security selection also detracted, predominantly within senior banks and real estate. |
Morningstar Pillars | |
People | Above Average |
Parent | Above Average |
Process | High |
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