Rated Funds 2014: Four global bond funds

Despite bond funds not being as popular as they have been in recent years, especially following the global financial crisis, there are still good reasons for holding them, and there are still out-of-favour areas of the fixed-income market where value can be found.

In order to ensure they have as much scope as possible to exploit the opportunities that are still available, most of the rated funds we have selected are flexible and can invest in different types of bond.

The group below covers the global bond funds that can diversify their funds geographically and also make use of currency movements. The other group comprises those focusing on UK sterling denominated bonds where managers can spread their holdings.

To find out the methodology behind Money Observer's Rated Funds, read: How 2014's Rated Funds were chosen.

M&G Global Macro Bond

This fund was the winner of Money Observer's best global bond larger fund award last year. M&G Global Macro Bond is managed by Jim Leaviss, who is head of retail fixed interest at M&G.

The fund gives him full flexibility to invest in any type of fixed-interest security in the world, in any currency. He uses this flexibility to take advantage of different economic conditions and global trends, including interest rate movements and inflation.

 Leaviss actively manages the types of bonds, their maturities and the fund’s exposure to different currencies in order to achieve the best returns. By using derivatives, he believes he can also ensure that the fund performs in all types of market conditions.   

Marlborough Global Bond

This fund has been a Money Observer global bond fund award winner for two consecutive years. The Marlborough Global Bondhas been managed by Geoff Hitchin for more than 25 years, with Nicholas Cooling as co-manager for the past 15.

They pursue a cautious management style, ensuring the fund’s holdings are broadly diversified in terms of types of bond held, geography, terms to maturity and credit ratings. In this way they aim to be able to capture gains while limiting the effects of market falls. The portfolio currently contains more than 200 holdings.

Old Mutual Global Strategic Bond

The Old Mutual Global Strategic Bond is a Money Observer's Editor’s Selection. It is managed by Stewart Cowley, who is the head of fixed income at Old Mutual.

Cowley can invest in a wide range of fixed-income instruments, which gives him the flexibility to respond to changing economic conditions. The portfolio is generally focused around seven strategic themes, and for each theme the likely types of fixed-interest investment to benefit are identified.

His aim is to deliver positive returns in all market conditions. The fund can also "short sell" bonds, so it can profit from falling bond prices.

Standard Life Emerging Market Debt

This fund is a Money Observer's Editor’s Selection. The Standard Life Emerging Market Debt is a relatively new fund, having been launched in October 2012. However, the manager Richard House has a long pedigree, having previously worked at Threadneedle.

Although emerging market debt is no longer flavour of the month, House is likely to be able to identify where there is value available. One of the differences between this fund and some of its peer group is that it holds almost exclusively dollar-denominated bonds, rather than those in local currencies.   

This article is for information and discussion purposes only and does not form a recommendation to invest or otherwise. The value of an investment may fall. The investments referred to in this article may not be suitable for all investors, and if in doubt, an investor should seek advice from a qualified investment adviser.