CF Canlife Short Duration Corporate Bond Fund Update

a sideways markets

BY BILL HARER, HEAD OF FIXED INCOME - CREDIT RESEARCH & UK LINKED FUNDS AND MIKE COUNT, SENIOR FUND MANAGER

October was more of a sideways market in corporate credit, as gilt yields trended up and down but with no real significant moves. This was because the market had already largely priced in a November rate rise from the Bank of England (BoE) back in September. As a result, corporate spreads were also fairly static.

The big news for the fixed income market in October actually came from the European Central Bank (ECB), as it announced that it would begin tapering its asset purchase programme from January 2018. This would see its monthly purchase of €60 billion worth of government and corporate bonds be reduced to €30 billion between January and September next year.

However, similarly to the BoE, ECB President Mario Draghi made this announcement in a relatively dovish manner, for example, there was no guidance as to what would happen from September onwards and the tapering has been kept deliberately flexible. Therefore, government bond yields on the continent did not really move either.

This fits in with our belief that both the BoE and the ECB want to embark on this monetary tightening cycle with room to manoeuvre. They are beginning to take away the extraordinary monetary support that the market has become accustomed to, but will do so in a considered and gradual manner.

Important Information

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.

CLI001012 Expiry on 15 February 2018

 

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