All insights

In this short video, TwentyFour CEO Mark Holman outlines what he expects to see from bond markets in the next few weeks, and explains why he thinks fiscal stimulus in the US can be the catalyst for the rally to resume in the medium term.

The press can have their sensational headlines, but these stories have little substance when it comes to the impact on the reputation risk of banks or indeed any significant impact on their balance sheets come May 2021.

One of the legacies of Europe’s post-crisis lending landscape was a huge retrenchment in risk appetite, amplified by a lack of bank capital and in some instances funding for an extended period of time.

Having just celebrated the fifth birthday of his Vontobel Fund – TwentyFour Absolute Return Credit Fund, Chris Bowie discusses some of his biggest challenges in the past five years, who the fund is designed for and how it has performed over that five year period.

With September set to be the first negative month for most risk asset markets since March, it is worth analysing what has been driving the reversal.

Five years ago we launched a simple strategy with a complicated name. The goal sounded simple: to return 2.5% more than cash, after fees, from a long-only, unlevered credit fund. And to do that with as little volatility as possible (but never being allowed to have more than 3% volatility).

Overall CLO and loan performance have exceeded our expectations, though there are still plenty of headwinds for the market, chief among which is the prospect of further lockdowns and more economic disruption as Europe battles a second wave of COVID-19 cases.

Overall, in our view there may be some temporary volatility ahead which investors can try to sidestep or even take advantage of, but it’s probably not worth trying to be too cute as our medium term outlook is still constructive.

A cut by the Fed or the BoE from here would mean negative rates, while the ECB already has its deposit rate deeply negative at -0.5%.

The Bank’s ability to dampen market volatility has certainly been a comfort to fixed income investors; over the last month £ IG spreads have moved in a range of just 4bp and ended tighter than they started, which compares rather favourably to the 5% peak-to-trough swing in GBP-USD over the same period.

George Curtis discusses high yield and default rates.

Partner and Portfolio Manager Chris Bowie discusses whether a particular low volatility credit fund could have been managed on a sustainable basis, while still meeting its objectives