Please note that tax, investment, pension and ISA rules can change and the information and any views contained in this article may now be inaccurate.
What is the AJ Bell Favourite funds list?
The AJ Bell Favourite funds list is designed to lighten your research load. There are thousands of funds out there – so we’ve narrowed the field by selecting a high-quality shortlist of funds we believe can deliver their objectives over the long term. To make the list, each fund needs to pass our robust, independent selection process.
What have we changed?
We constantly review the funds on our list, as well as on the market, to ensure our selection remains up to date.
Following a recent review, we’ve decided to remove the Invesco Corporate Bond fund, and add the Artemis Corporate Bond fund.
What is the Artemis Corporate Bond fund, and why have we added it?
The Artemis Corporate Bond fund was launched in October 2019. Despite being a new fund, it boasts an experienced and familiar manager in Stephen Snowden. Snowden has 20 years’ experience managing corporate bonds funds in the UK – including the Kames Investment Grade Bond fund, which featured on our Favourite fund list until September 2018 (when we removed it for its high charges relative to similar funds).
As well as for the pedigree of the fund manager, we also added this fund for its competitive OCF of 0.40% per annum.
What is its investment strategy?
When launching the Artemis Corporate Bond fund, Stephen Snowden took with him a number of his previous colleagues. And unsurprisingly, he employs an almost identical investment process to his time at Kames.
This process is active in its approach, looking to combine longer-term strategic positions alongside shorter-term tactical positions to take advantage of market opportunities. At its heart is a three-step process covering ‘fundamentals’, ‘valuations’ and ‘technicals’. Let’s look at these in turn.
Firstly, fundamentals analyses the economic cycle and inflation outlook, in tandem with monetary and fiscal policy, to try and understand the potential outlook for profit forecasts. This is coupled with detailed company analysis to understand the management strategy and, importantly, how bondholders and shareholders are likely to be considered.
Secondly, valuation looks right across the credit spectrum to understand the relative pricing of different parts of the bond market. It also employs yield curve analysis, as well as cross-currency analysis to identify opportunities that may exist in other markets.
Thirdly, technical analysis covers short term specific issues at both a market and individual company level, as well as issuance data and potential M&A activity, among other factors.
Ultimately, all of this analysis seeks to identify those companies that are fundamentally improving but which the market has overlooked – as well as those companies that are fundamentally strong but the market has become complacent about.
With a flexible, high-conviction approach led by a highly motivated and committed fund manager, we believe this fund is well placed to deliver on its stated objective. On top of that, it has a sensible, low fee structure, with an OCF of 0.40%.