Artemis Strategic Bond Fund
Fund Manager's Comment
Data as at 29 May 2009
Government Bonds
Fears about government issuance and a ‘flight away from quality’ meant that government bonds yields rose sharply over the month.
Investment grade
The market has been performing very well, with record new issuance being absorbed. Cashflow into the market is very strong.
Bank bonds have done very well as expectations diminished that all banks are about to default.
High Yield
A very strong month with a perkier equity market helping sentiment. Moreover the bank bonds falling into this sector have subsequently rallied.
We have maintained our weighting to financial issues and have topped up many of the holdings. These have generally done well. Further, new issues have been an opportunity to commit new cash to the market. We took advantage of a buyback of our Barclays bonds into a new more senior Barclays 10% bond. This subsequently rallied strongly. Furthermore, RSA did a new deal with a healthy 9.375% coupon.
We have been short of futures for most of the month, which helped our performance as government yields rose quite sharply. Lastly the high yield percentage reduced as our Boots holding redeemed (phew!). Some of our bank holdings were downgraded into the high yield sector, resulting in our high yield percentage staying at around 30%.
The market has come a long way very quickly over the last month. The concern is that government yields may rise to such a degree that it starts to undermine the performance of the investment grade holdings. To try to protect against this, we will retain our short futures position for now and keep our bank holdings which tend not to be so adversely affected by changes in government yields. We believe that financials still have further to play catch-up from their extremely distressed levels earlier this year. The high yield market may well be prone to some weakness - having had an excellent run - as defaults continue to increase. We are sticking to the more non-cyclical telecom stocks and shorter dated holdings.
Awards
Strategic
Bond PDFKey Facts
| IMA Sector | £ Strategic Bond |
|---|---|
| Sedol - Quarterly Dist | B09DMK3 |
| Sedol - Quarterly Acc | B09DMJ2 |
| Fund Size (offer basis) | £349.7m |
| Distribution yield | 6.9% |
| Unit offer price (Class Q dist. units) | 42.88p |
| Unit bid price (Class Q dist. units) | 39.47p |
| Unit offer price (Class Q acc. units) | 51.70p |
| Unit bid price (Class Q acc. units) | 47.59p |
| Valuation (UK business days) | 12:00 |
| Minimum lump sum investment | £1,000 |
|---|---|
| Minimum monthly investment | £50 |
| Launch | 1 June 2005 |
| Launch price | 50p |
| Preliminary charge | 5.25% |
| Annual Management Fee | 1.0% |
| Unit type | Distribution & Accumulation |
| Distribution pay dates (Class Q units) | 30 Apr, 31 Jul, 31 Oct, 31 Jan |
| Year end | 31 March |
| Total Expense Ratio | 1.14% |
Data as at 29 May 2009. Class M units are available for investments over £25,000. For more information, please contact us.
Performance
| Since Launch* | 3 Years | 1 Year | 6 Months | 3 Months | |
|---|---|---|---|---|---|
| Strategic Bond Fund (TR)† | -4.8 | -10.1 | -13.2 | 4.9 | 10.2 |
| iBoxx Sterling non gilts (TR)† | 0.4 | -2.0 | -2.3 | 1.1 | 2.0 |
| Sector Average | -9.4 | -11.5 | -11.0 | 3.5 | 6.2 |
| Position in Sector | 15 | 22 | 36 | 29 | 15 |
| Funds in Sector | 43 | 45 | 54 | 58 | 59 |
| Quartile | 2 | 2 | 3 | 2 | 1 |
Please remember that past performance is not a guide to the future.
* Data from 30 June 2005, due to the fixed price period of the fund. Source: Lipper Limited, bid to bid in sterling with net income reinvested to 29 May 2009. All figures show total returns. †Percentage Growth. Sector is IMA £ Strategic Bond.
Percentage Growth
Artemis Strategic Bond Fund Fund 12 Months to 31 March 2009
| 2009 | 2008 | 2007 | 2006 | 2005 |
|---|---|---|---|---|
| -20.3 | -6.6 | 5.7 | n/a | n/a |
Further Discrete Performance periods.
Source: Lipper Limited, bid to bid in sterling with net income reinvested. All figures show total returns.
Value of £1,000 invested at Launch to 29 May 2009.
Data from 30 June 2005, due to the fixed price period of the fund. Source Lipper Limited, bid to bid in sterling with net income reinvested to 29 May 2009.
Asset Allocation*
*Without cash. Source: Internal
Top Ten Holdings*
| Nordic Telephone Company 2006 F/R 01/05/16 Q | 2.2% |
|---|---|
| RSA Insurance 9.375% 2039 | 1.9% |
| QBE Insurance Group | 1.8% |
| ASIF II 5.375% 07/12/09 GBP | 1.8% |
| JP Morgan Chase Bank 4.625% | 1.8% |
| Rhodia Frn 2013 | 1.8% |
| Cable & Wireless 8.625% 2019 | 1.8% |
| Imperial Tobacco Finance 5.5% 2016 | 1.8% |
| VTB Capital SA | 1.8% |
| Roche Holding 5.5% 2015 | 1.7% |
* Without cash.
Source: Internal.
Market Sector Split*
| Banks | 25.2% |
|---|---|
| Financial Services | 13.2% |
| Utilities | 10.8% |
| Telecommunications | 10.6% |
| Insurance | 8.4% |
| Industrial Goods & Services | 6.5% |
| Chemicals | 6.0% |
| Travel & Leisure | 4.9% |
| Personal & Household Goods | 4.7% |
| Other | 9.7% |
* Without cash.
Source: Internal.
Risk Warning
Issued by Artemis Fund Managers Limited, which is authorised and regulated by the Financial Services Authority (www.fsa.gov.uk), 25 The North Colonnade, Canary Wharf, London E14 5HS and is a member of the IMA. Artemis Fund Managers Limited is a member of the Artemis Marketing Group. We only market our own unit trusts. The value of an investment and any income from it can fall as well as rise as a result of market and currency fluctuations and you may not get back the amount originally invested. In order to offer a higher yield, a proportion of the Artemis Strategic Bond Fund will be invested in higher risk securities that may increase the risk to your capital. In particular, there can be no assurance that capital appreciation will occur in the early years as initial charges are levied on your investment and charges are not made uniformly throughout the life of your investment. Investments in fixed interest securities and bonds are subject to credit and market risk. The value of the underlying assets and therefore the value of units in this Fund will be impacted by fluctuations in interest rates and the perceived credit risk of an issuer.
All data is sourced internally unless otherwise stated.
The distribution yield reflects the amounts that may be distributed over the next twelve months as a percentage of the mid-market unit price of the fund as at the date shown. It does not include any preliminary charge and investors may be subject to tax on distributions. The distribution yield is also the underlying yield for the fund.
