Our philosophy and process

  • The strategy follows an unconstrained, highly dynamic asset-allocation approach within a broad universe of global bonds; it can invest in government bonds, emerging-market sovereigns, high-yield bonds and investment-grade corporate debt. The strategy has the flexibility to manage currency exposure actively to generate additional returns.
  • A constantly evolving and forward-looking approach seeks to anticipate change, manage risk, and identify opportunities. ESG considerations are integrated throughout the research process and via proprietary quality reviews, to ensure that any material issues are captured.

Every time we consider a security or look at an industry or country, it’s in the context of what’s happening across the world. We believe the investment landscape is shaped over the long term by some key trends, and we use a range of global investment themes to capture these.

State intervention

Authorities have engaged in ever-greater policy intervention and regulation to shore up economic growth. We believe ‘state intervention’ has increased misallocation of capital, caused volatility in markets and inflated asset prices – and we think that calls for a stock-specific approach.

Financialisation

Cheap money has caused rapid growth in a sector already supported by deregulation. ‘Financialisation’ investigates the implications of finance dominating economic activity, instead of serving it.

Transcript

The backdrop for bond investors looks uncertain. The 30-year bull market in bonds may have come to an end, and in its place could be volatile conditions.

In the years ahead, we anticipate marked divergence in the fortunes of regions, currencies and bond instruments.

So what should investors do?

A dynamic, unconstrained approach to bond investing could help maximise opportunities while trying to minimise risks.

One solution could be our Global Dynamic Bond strategy.

It uses a mixture of global fixed-income markets and some hedging techniques to achieve its absolute-return objective.

And it invests in a range of bond and currency markets to try to exploit divergence.

So how does it work?

The strategy has a transparent, single portfolio of direct investments. The emphasis is on traditional fixed-income asset classes for simplicity and liquidity.

There are four key asset classes: government bonds, investment-grade corporate bonds, emerging- market sovereigns and high-yield corporate bonds.

They are selected based on what we see as their strong fundamentals, and are guided by the perspective of our global investment themes.

We balance the allocation to try and suit the economic cycle – whether that’s rising interest rates, defaults, devaluation or inflation.

Then we seek to dampen volatility and preserve capital by hedging interest rate and currency exposure. We invest in a range of markets including inflation-linked bonds, active currency positions and short-dated high-yield bonds.

Key to the strategy is flexibility, dynamic security and asset allocation.

We believe that’s vital in order to take advantage of the changing fortunes of bond and currency markets.

The Global Dynamic Bond strategy aims to capture market upside and preserve capital, in order to deliver long-term results for our clients.

Investment team

Our Global Dynamic Bond strategy is managed by a focused, experienced fixed-income team. Our global sector analysts and investment managers are located on a single floor in London, which helps to ensure that the investment process is flexible and opportunistic. Guided by our global investment themes, the team works together to identify opportunities and risks through research and debate.

18
years' average investment experience
10
years' average time at Newton

Strategy profile

Objective

To maximize the total return from a globally diversified portfolio, predominantly comprising high-yielding corporate and government fixed-interest securities.

Performance aim

Aims to deliver a minimum return of cash (one-month sterling LIBOR) +2% per annum over 5 years before fees. In doing so, the strategy aims to achieve a positive return on a rolling 3-year basis. However, a positive return is not guaranteed and a capital loss may occur.

Strategy size

£4.1bn (as at 30 September 2018)

Strategy inception

Composite inception: 1 May 2006
Representative portfolio (Newton Global Dynamic Bond Fund) inception: 28 April 2006
UK Inst Global Dynamic Bond pooled fund factsheet

Factsheet

Facts and commentary for the past quarter's fund and market performance.


Global Dynamic Bond brochure

Brochure

More detail on the strategy's investment approach.


Key Investor Information Document

Your capital may be at risk. The value of investments and the income from them can fall as well as rise and investors may not get back the original amount invested.

Key investment risks

 

  • The performance aim is not a guarantee, may not be achieved and a capital loss may occur. Strategies which have a higher performance aim generally take more risk to achieve this and so have a greater potential for the returns to be significantly different than expected.
  • This strategy invests in international markets which means it is exposed to changes in currency rates which could affect the value of the strategy.
  • The strategy will use derivatives to generate returns as well as to reduce costs and/or the overall risk of the strategy. Using derivatives can involve a higher level of risk. A small movement in the price of an underlying investment may result in a disproportionately large movement in the price of the derivative investment.
  • Investments in bonds are affected by interest rates and inflation trends which may affect the value of the strategy.
  • The strategy holds bonds with a low credit rating that have a greater risk of default. These investments may affect the value of the strategy.
  • The strategy may invest in emerging markets. These markets have additional risks due to less developed market practices.