The Nomura Global Dynamic Bond Fund reached its five-year anniversary on 31 January, having now grown to over USD1.1 billionManaged by Richard ‘Dickie’ Hodges, Head of Unconstrained Fixed Income, the Fund has used its flexible, dynamic investment strategy to participate in the strong performance of fixed income markets whilst containing downside risk through highly active and efficient risk management.
Speaking about the fund’s anniversary, Dickie Hodges, Head of Unconstrained Fixed Income, says: “There are two important episodes in our 5-year journey that demonstrate our ability to provide downside protection to the portfolio as well as generate positive returns in a risk-on environment:
“In 2018, not only had the Federal Reserve begun a rate-hiking cycle, they had also begun the first steps to reduce their balance sheet. With interest rates moving higher, and projected to continue rising in 2019, investors could not be certain what discount rate to apply to future cash flows.
“Equity markets fell more than 17 per cent in 2018.
“Unusually for a fixed income fund, through highly active asset allocation throughout the year and the purchase of put options on US Treasuries, the Global Dynamic Bond Fund generated positive returns, even as interest rates moved higher. Moreover, in the final quarter of 2018, judicious hedging of the risky allocations through equity put options helped to mitigate volatility. The Fund finished 2018 up 0.5 per cent – near the top of its peer group and a welcome source of stability for investors in tough times.
“2019 was a time to take risk and allocate with conviction.
“It became clear that the Federal Reserve would not continue to tighten monetary policy. Trade tensions were ratcheting up, growth figures remained anaemic in the US and very weak in the rest of the world, whilst inflation was subdued.
“This was the cue for a worldwide rally in risk assets, particularly those most likely to benefit directly from US interest rates on hold, and the ECB return to quantitative easing.
“As a result, the Fund finished 2019 with a total return (net of fees) of 17.3 per cent.”
Peter Ball, Head of EMEA Distribution at Nomura Asset Management UK, says: “Nomura Asset Management’s fixed income offering currently has over $50bn of assets under management in active fixed income accounts globally.
“The Global Dynamic Bond Fund managers have achieved excellent absolute performance while employing robust risk management strategies despite the geo-political turmoil and monetary policy shifts, which is vital for any medium to longer-term investor.
“Going into 2020 we are seeing increased demand for this actively managed strategy. It backs positions with conviction whilst hedging against downside risks as they have done throughout the Fund’s history.”
