LF Canlife Short
Duration Corporate
Bond Fund

The LF Canlife Short Duration Corporate Bond Fund is a diversified fixed income portfolio consisting primarily of short duration investment grade corporate debt. The Fund has two main priorities – a strong focus on capital preservation and sustainable income. 

Fund management team

Canada Life Investments possesses an experienced credit team and a longstanding investment process which focuses on fundamental credit research, believing this is the best way to add value for clients and generate superior returns. The LF Canlife Short Duration Corporate Bond Fund is co-managed by Senior Fund Manager, Michael Count and Fund Manager, Steve Matthews.

Michael joined Canada Life Investments from university in 2004 as a credit analyst and was promoted to fund manager in October 2007. He is the senior fund manager on the LF Canlife Short Duration Corporate Bond Fund and the LF Canlife Corporate Bond Fund. Steve joined Canada Life Investments in 1996 and took on responsibility for the cash funds in 2002. Since 2010, Steve’s role has expanded to encompass managing on balance sheet assets and providing liquidity coverage for Canada Life Investments and its subsidiaries.

fund strategy

Central to the management of the LF Canlife Short Duration Corporate Bond Fund is the team’s strong belief that the avoidance of bad credits is critical to success. They have a conservative, low risk style, focusing on capital preservation and sustainable income.  The Fund has the following core characteristics:

  • Concentration on good credits
  • Well diversified

The managers’ approach is flexible within a framework. They do not attempt to track the benchmark, the iBoxx £ Non-Gilt 1-5 Year Index, but are always aware of the Fund’s positioning against it.

how the fund is managed

Firstly, the team considers global trends in macro factors, such as interest rates and inflation, and analyses the domestic influences on UK bond markets. Each quarter they conduct a detailed macro review and make forecasts for interest rates and bond yields in the key markets of the UK, US and Europe. The whole fixed income team meet on a weekly basis to review a range of economic and market information including: commodity prices, inflation expectations, currencies, equity markets, sovereign CDSs, short-term rates, 10 year bonds, economic data releases, new issues coming to the government and corporate bond markets.

The portfolio is then constructed via a bottom-up approach, with the managers ensuring that the Fund’s sector exposure is sufficiently diversified, as well as reflective of the teams’ macro views. Within each sector, they seek the best-value companies, review valuations on three levels:

  • Price relative to peer issues
  • Price relative to past performance
  • Price relative to outlook and ratings

reasons to recommend

LESS SENSITIVITY TO HIGHER RATES

With corporate bond yields at historically low levels, any potential move higher in rates – or a widening of spreads – can have a meaningful impact on investor returns. Investing in short duration corporate bonds can minimise sensitivity to rising yields, while dampening down the impact of credit market volatility

CAPITAL PRESERVATION

Our philosophy is founded on the strong belief that the avoidance of bad credits is critical to success. This is particularly important in the short duration space, where one default has the potential to eliminate a year’s worth of income. Therefore, the managers have a conservative, low-risk style, focusing on capital preservation and sustainable income.

ESTABLISHED TEAM & STRONG CREDIT ANALYSIS

Our credit analysis team has in-depth knowledge of individual corporates and sectors, drawing on the firm’s long experience in annuity management. Fund Managers Mike Count and Steve Matthews have both been at the firm for more than 13 years, whilst Roger Dawes, Head of Fixed Income – Portfolio Management joined Canada Life Investments in 1998

A FOCUS ON FUNDAMENTALS

Particular attention is devoted to corporate dynamics and strategy, balance sheet strength, liquidity, leverage and management quality. Our team favours issuers displaying a number of different characteristics – including solid profitable businesses with long track records, limited ratings downsides, positive cash flows, low debt levels, clear disclosures and bonds offering structural seniority.

FUND PERFORMANCE

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. Currency fluctuations can also affect performance. Performance figures are on a bid to bid with net income reinvested basis. Valuations are based on the previous day's prices.

Interested in this fund and would like to find out more?

Contact our team who will be happy to answer any questions you may have about this fund.

Tel Icon +44 (0)20 7415 6490

Email Icon contactclinvestments@canadalife.co.uk

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