Investments  

Artemis launches high yield bond fund

Artemis launches high yield bond fund

Artemis has launched a Short Duration High Yield Bond fund which will be run by the fixed income team the firm poached from Kames Capital earlier this year.

The bond fund will initially be run by David Ennett and Stephen Baines, with other former Kames employees Juan Valenzuela, Jack Holmes and Stephen Snowden supporting the managers.

The trio are part of a team of five bond managers that resigned from Kames in December 2018, and it was announced shortly afterwards they were joining Artemis. 

The managers are based in Edinburgh. Kames had lost many managers in recent years, with the previous co-heads of fixed income Phil Milburn and David Roberts having departed the firm to join Liontrust at the start of 2018. 

A short dated high yield bond fund invests in bonds that have a credit rating of BBB or lower, as credit ratings lower than that are defined as high yield.

Bonds with a short date to maturity are those that will repay investors the principal amount within a short period of time and as such should be less susceptible to interest rate movements.

Mr Ennett said: "While areas of the fixed income market offer yields below inflation, short maturity high yield corporate bonds are the mainstay of this new fund. They provide yields which normally exceed inflation.

"Short-maturity BB- and B-rated corporate bonds, an important part of the fund’s universe, have typically been less volatile than the lower-rated parts of the high yield market.

"Our aim is to preserve investors’ capital and see it grow steadily in real terms, via re-invested income."

Tom Sparke, investment director at GDIM in Cambridge, said: "This team have provided reliable and robust returns in their previous employment and with added resource and a sensible remit I think they can do the same here.  

"Short-dated high yield can provide a good level of yield while taking out some of the interest rate risk and reducing default risk so the risk-adjusted return potential looks excellent.

"I think this fund will be an asset to Artemis’ already impressive fixed income offering."

david.thope@ft.com