Artemis High Income - a change at the top
Dominic Rowles | Wed 17 October 2018
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- The fund’s share portfolio is under new management
- The bond portfolio is still managed by experienced investor Alex Ralph
- We have confidence the fund can deliver good returns over the long term
Our view
Strategic bond funds have the flexibility to invest across bond markets. From government to corporate and high-yield bonds, both at home and overseas. We think fund managers who fully use this freedom have the potential to perform well over the long term.
Alex Ralph is one of our favourites. She’s been running bond portfolios for 16 years and has a good long-term track record. She tends to focus on bonds with a lower credit rating, analysing the prospects of companies that issue them. This can produce a higher yield but it is a higher risk approach.
A maximum of 20% can be invested in shares that pay an attractive level of income. This helps diversify the fund and differentiates it from peers.
A change at the top
Management of the share portfolio was handed to Ed Legget and Paul Casson in May 2018. They replaced Adrian Frost and his team.
Ed Legget has a long track record of investing in UK businesses and Paul Casson is an experienced investor in European shares. Overall we had more conviction in Adrian Frost but incorporating a specialist European investor could improve the fund’s diversification. That’s why we’re happy to wait and see how they get on.
Alex Ralph will still manage the bond portfolio, which makes up the lion’s share of the fund. We still think this fund is a good option for investors looking for a higher income from bond and stock markets. It’s on the Wealth 150 list of our favourite funds across the major sectors.
How has the fund performed?
Alex Ralph has delivered a good level of income. An investment of £10,000 made when she took control of the fund in March 2014 has returned £2,274* in income, although this shouldn’t be seen as a guide to the future.
The fund currently yields 5.6% and investors have the option of receiving income on a monthly or quarterly basis. Yields are not a reliable indicator of future income though. The fund can take charges from capital, which increases the yield but reduces the potential for capital growth.
| Annual percentage growth | |||||
|---|---|---|---|---|---|
| Sept 13 -
Sept 14 |
Sept 14 -
Sept 15 |
Sept 15 -
Sept 16 |
Sept 16 -
Sept 17 |
Sept 17 -
Sept 18 |
|
| Artemis High Income | 9.4% | 0.8% | 7.5% | 9.1% | 1.3% |
| IA £ Strategic Bond | 6.0% | 1.1% | 8.2% | 2.9% | 0.0% |
Past performance is not a guide to the future. Figures shown with income reinvested. Source: *Lipper IM to 30/09/2018
Performance over the past year was boosted by investments in US high-yield bonds which performed well. Investments in both bonds and shares of companies in the energy industry also did well because of the rising oil price.
Manager’s outlook
Company profits are set to rise and the number of companies that can’t pay off their debts is expected to stay low. But there’s still a lot of uncertainty in the world and it’s causing volatility in stock and bond markets. Alex Ralph has used some of this volatility to add to her favourite investments, particularly those in the energy industry, at better prices. She thinks some attractive opportunities are emerging in European high yield bond markets and has invested more in this area too.
She’s kept the fund’s sensitivity to changes in interest rates relatively low. That could provide some shelter to the bond portfolio in a world of rising interest rates.