BY MIKE COUNT, SENIOR FUND MANAGER & KSHITIJ SINHA, FUND MANAGER
It was a somewhat quieter month for corporate credit in June, as spreads settled down post the Italian-inspired volatility of the previous month. New issues have now started to offer decent discounts which has thrown up some opportunities although it also tends to hurt the secondary spreads of these issuers. In the sterling market, investors are already pricing in a high chance of a rate hike in August although, as we saw in May, these perceptions can change quickly!
Economically, PMI data and retail sales data rebounded in the UK, following on from a weather-constrained quarter in the first three months of the year. However, full year GDP consensus is unchanged as the Brexit overhang continues to have an effect on the UK economy. Given that we are approaching the parliamentary recess period, we are expecting the quiet period to remain for the next couple of months.
From a fund perspective, we have not made any major changes to either the LF Canlife Corporate Bond Fund or the LF Canlife Short Duration Corporate Bond Fund. Currently, the portfolios are biased towards sectors with more attractive spread profiles – such as insurance – to better withstand expected interest rate and yield rises.
Past performance is not a guide to future performance. The value of investments may fall as well as rise and investors may not get back the amount invested. Income from investments may fluctuate.
The information contained in this document is provided for use by investment professionals and is not for onward distribution to, or to be relied upon by, retail investors. No guarantee, warranty or representation (express or implied) is given as to the document’s accuracy or completeness. The views expressed in this document are those of the fund manager at the time of publication and should not be taken as advice, a forecast or a recommendation to buy or sell securities. These views are subject to change at any time without notice. This document is issued for information only by Canada Life Investments. This document does not constitute a direct offer to anyone, or a solicitation by anyone, to subscribe for shares or buy units in fund(s). Subscription for shares and buying units in the fund(s) must only be made on the basis of the latest Prospectus and the Key Investor Information Document (KIID) available at www.canadalifeinvestments.com.
Canada Life Investments is the brand for investment management activities undertaken by Canada Life Asset Management Limited, Canada Life Limited and Canada Life European Real Estate Limited. Canada Life Asset Management Limited (no. 03846821), Canada Life Limited (no.00973271) and Canada Life European Real Estate Limited (no. 03846823) are all registered in England and the registered office for all three entities is Canada Life Place, Potters Bar, Hertfordshire EN6 5BA. Canada Life Asset Management is authorised and regulated by the Financial Conduct Authority. Canada Life Limited is authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and the Prudential Regulation Authority.
CLI01268 Expiry on 15 October 2018