The fund uses both cash bonds and fixed income-related derivatives to dynamically adjust strategic positions relating to shorter-term market movements.
Meanwhile, the sector’s ‘worst’ performers over the past year have also enjoyed positive returns.
HC’s Charteris Strategic Bond, M&G’s UK Inflation Linked Corporate Bond and Invesco’s Tactical Bond fund saw positive returns of 0.85, 3.80 and 4.59 per cent respectively.
These funds have limited their duration bet, which was the wrong place to be last year.
This year promises more uncertainty, both economically and politically. Naturally, strategic bond managers are not insulated against these pressures.
As ever, when it comes to fund selection it remains important to maintain a diversified shortlist of strategic bond funds and managers.
Charles Younes is research manager at FE Investments