This strategy is offered by Newton Investment Management Ltd (‘NIM’). NIM is part of the Newton Investment Management Group.

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. Material ESG risks, opportunities and issues are considered as part of the investment research process.

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.

Financialization

Cheap money has caused rapid growth in a sector already supported by deregulation. ‘Financialization’ 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 maximize opportunities while trying to minimize 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 investment team of research analysts and portfolio managers works together across regions and sectors, helping to ensure that our investment process is highly flexible. Guided by our global investment themes, we seek to identify opportunities and risks through research and debate.

21
years’ average investment experience
14
years’ average time at Newton

Strategy profile

Objective

The strategy seeks to deliver a minimum return of SOFR (30-day compounded) +2% per annum over rolling 5-year periods, from a globally diversified portfolio comprised of multiple fixed-income asset classes. In doing so, it 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.

Performance benchmark

SOFR (30-day compounded) +2%*

*Please note that on November 1, 2021, the performance benchmark for this strategy changed from 1-month USD LIBOR +2% to SOFR (30-day compounded) +2%.

Strategy size

US$4.1bn (as at Dec 31, 2021), including GBP, EUR, USD and AUD strategies

Strategy inception

Composite inception: September 1, 2010 (USD strategy); May 1, 2006 (GBP strategy)

NIMNA Global Dynamic Bond strategy factsheet

Quarterly factsheet

Facts on the strategy’s performance and positioning.


NIMNA Global Dynamic Bond brochure

Brochure

More detail on the strategy’s investment approach.

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.

ESG analysis may vary depending on the type of security, investment rationale and investment strategy. Newton does not currently view certain types of investments as presenting ESG risks, opportunities and/or issues, and believes it is not practicable to evaluate such risks, opportunities and/or issues for certain other investments. In addition, Newton will make investment decisions that are not based solely on ESG considerations. In some cases, therefore, Newton may conclude that other attributes of an investment outweigh ESG considerations when making investment decisions.

Key investment risks

  • Performance Aim Risk: 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 returns to vary significantly.
  • Currency Risk: This strategy invests in international markets which means it is exposed to changes in currency rates which could affect the value of the strategy.
  • Derivatives Risk: Derivatives are highly sensitive to changes in the value of the asset from which their value is derived. A small movement in the value of the underlying asset can cause a large movement in the value of the derivative. This can increase the sizes of losses and gains, causing the value of your investment to fluctuate. When using derivatives, the strategy can lose significantly more than the amount it has invested in derivatives.
  • Changes in Interest Rates & Inflation Risk: Investments in bonds/money market securities are affected by interest rates and inflation trends which may negatively affect the value of the strategy.
  • Credit Ratings and Unrated Securities Risk: Bonds with a low credit rating or unrated bonds have a greater risk of default. These investments may negatively affect the value of the strategy.
  • Credit Risk: The issuer of a security held by the strategy may not pay income or repay capital to the strategy when due.
  • Emerging Markets Risk: Emerging Markets have additional risks due to less-developed market practices.
  • CoCos Risk: Contingent convertible securities (CoCos) convert from debt to equity when the issuer’s capital drops below a pre-defined level. This may result in the security converting into equities at a discounted share price, the value of the security being written down, temporarily or permanently, and/or coupon payments ceasing or being deferred.
  • Counterparty Risk: The insolvency of any institutions providing services such as custody of assets or acting as a counterparty to derivatives or other contractual arrangements, may expose the strategy to financial loss.