Threadneedle European Short-Term High Yield Bond Fund

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Reasons to invest
Fund at a glance
Insights
Literature
Portfolio Managers

The Threadneedle (Lux) European Short-Term High Yield Bond Fund is a total return bond strategy that follows a ‘buy and hold’ approach to exploit opportunities in short maturity European high yield corporates.

The fund, co-managed by Roman Gaiser and Gareth Simmons, draws on the deep research capabilities of our High Yield team to deliver the proven investment process of our Threadneedle (Lux) European High Yield European Bond Fund in a short maturity format.
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Reasons to invest​

Attractive risk-adjusted return profile

The portfolio aims to deliver solid total returns driven primarily from income and with potential for some capital appreciation, with a focus on downside risk management and lower volatility than the European high yield market due to the strategy’s shorter maturity structure.

Managed to short final maturity, rather than duration

With a final maturity target of less than four years*, the strategy seeks to protect investors in case of a market sell-off, reducing the risk of a duration extension when least favourable, for instance in a falling market, that can be triggered by the repricing of callable bonds.

Trusted investment team

Our experienced portfolio managers work closely with our high yield analysts and our wider extensive global network of research analysts that produce independent issuer analysis and independent risk ratings, giving us a deep understanding of issuer and industry dynamics.
* At least 80% of NAV with final maturity 4 years or less..

Fund at a glance​

Active, bottom-up, total return approach

✔ Aims to deliver income
✔ Focus on issuer and security selection – less sensitive macro influences
✔ Not managed to benchmark

Conservative risk profile

✔ Lower volatility than European High Yield Market
✔ Managed to final maturity, rather than duration, limiting drawdown and interest rate sensitivity
✔ 80% portfolio in securities with maturity ≤ 4yr, expected duration < 2yr

Experienced team, established proces

✔ Strength in resourced and experienced internal research team
✔ Mirrors proven investment philosophy and process of Threadneedle European High Yield Strategy
✔ Delivering our strong High Yield capabilities in a short maturity format

Why take a short-maturity approach?

Most high yield bonds are “callable”, in that at predetermined points in time before they ultimately mature, the issuer can “call” back the bond, repaying the bondholders. Investors will usually look to the next call date to measure duration of bonds.
In a falling market, a bond callable in 3 years is no longer a 3-year bond when you need it (i.e. in a market sell-off where the call is not activated), extending duration.
Our approach focuses on ultimate legal maturity rather than the probable next call date. This enables us to control duration extension risk more effectively, limiting drawdown.

Read more on the benefits of a short maturity approach in Roman’s viewpoint High Yield Bonds: A mature approach.

Price evolution
Price evolution

Insights

20 July 2020
Fixed income
Fixed income

Fixed Income Desk

In Credit - Weekly Snapshot

In Credit - Weekly Snapshot - July 2020

Our fixed income team provide their weekly snapshot of market events.
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Read time - 3 min

Literature

PDF

Prospectus
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PDF

Fund Profile
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KIID
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Portfolio Managers

Roman Gaiser
Co-Manager and Head of Portfolio Management, High Yield, EMEA
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Roman Gaiser
Roman Gaiser
Co-Manager and Head of Portfolio Management, High Yield, EMEA

Roman Gaiser is the Head of Portfolio Management, High Yield, EMEA having re-joined Columbia Threadneedle Investments in 2018. Based in London, Roman is responsible for the performance of Columbia Threadneedle’s European high yield portfolios.

 

He has over 20 years of experience in European corporate credit and more than 18 years of experience in running European high yield portfolios. Roman has worked for the company before as a high yield portfolio manager between 2005 and 2011. Since 2011, he was Head of High Yield at Pictet Asset Management, in charge of its European high yield and European short-term high yield bond strategies. Previously, he has worked as a portfolio manager at F&C in London and as an analyst for Bankgesellschaft in Berlin.

 

Roman holds a post-graduate degree from Dauphine University of Paris, a Diploma in Economics from the University of Hamburg (HWP) and a diploma in business management from EDC, Paris. He also holds the Certified European Financial Analyst diploma.

Gareth Simmons
Portfolio Manager
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Gareth Simmons
Portfolio Manager

Gareth Simmons joined the company in 2011 and is currently a portfolio manager and investment analyst in the European High Yield Bond Team. His portfolio management responsibilities include the management of an enhanced ESG (Environmental, Social & Governance) high yield strategy. As a senior investment analyst he also has specific responsibility for the telecom, media and technology (TMT) sectors.

Prior to joining the company, Gareth was a sell-side TMT credit analyst at Morgan Stanley.

Gareth has a BSc (Hons) in Natural Sciences from the University of Durham and he also holds the Investment Management Certificate.

Key Risks​

Investment risk

The value of investments can fall as well as rise and investors might not get back the sum originally invested.

Currency risk

Where investments are in assets that are denominated in multiple currencies, or currencies other than your own, changes in exchange rates may affect the value of the investments.

Counterparty risk

The fund may enter into financial transactions with selected counterparties. Any financial difficulties arising at these counterparties could significantly affect the availability and the value of fund assets.

Issuer risk

The Fund invests in securities whose value would be significantly affected if the issuer refused, was unable to or was perceived to be unable to pay.

Liquidity risk

The fund holds assets which could prove difficult to sell. The fund may have to lower the selling price, sell other investments or forego more appealing investment opportunities.

Inflation risk

Most bond and cash funds offer limited capital growth potential and an income that is not linked to inflation. Inflation is likely to affect the value of capital and income over time.

Interest rate risk

Changes in interest rates are likely to affect the fund’s value. In general, as interest rates rise, the price of a fixed rate bond will fall, and vice versa.

Valutation risk

The fund’s assets may sometimes be difficult to value objectively and the actual value may not be recognised until assets are sold.

Investment in derivatives

The Investment Policy of the fund allows it to invest materially in derivatives.

Volatility risk

The fund may exhibit significant price volatility.
Important Information​
For Professional and/or Qualified Investors only (not intended for retail clients). Past performance is not a guide to future performance. The value of investments and any income is not guaranteed and can go down as well as up and may be affected by exchange rate fluctuations. This means that an investor may not get back the amount invested. Your capital is at risk. Threadneedle (Lux) is an investment company with variable capital (Société d’investissement à capital variable, or “SICAV”) formed under the laws of the Grand Duchy of Luxembourg. The SICAV issues, redeems and exchanges shares of different classes. The management company of the SICAV is Threadneedle Management Luxembourg S.A, which is advised by Threadneedle Asset Management Ltd. and/or selected sub-advisors. This material is for information only and does not constitute an offer or solicitation of an order to buy or sell any securities or other financial instruments, or to provide investment advice or services. Subscriptions to a Fund may only be made on the basis of the current Prospectus and the Key Investor Information Document, as well as the latest annual or interim reports and the applicable terms & conditions. Please refer to the ‘Risk Factors’ section of the Prospectus for all risks applicable to investing in any fund and specifically this Fund. Documents other than KIIDs are available in English, French, German, Portuguese, Italian, Spanish and Dutch (no Dutch Prospectus). KIIDs are available in local languages. Documents can be obtained free of charge on request by writing to the management company at 44, rue de la Vallée, L-2661 Luxembourg, Grand Duchy of Luxembourg, from International Financial Data Services (Luxembourg) S.A. at 47, avenue John F. Kennedy, L-1855 Luxembourg, Grand Duchy of Luxembourg, from www.columbiathreadneedle.com. The fund characteristics described above are internal guidelines (rather than limits and controls). They do not form part of the fund’s objective and policy and are subject to change without notice in the future. Threadneedle Management Luxembourg S.A. Registered with the Registre de Commerce et des Sociétés (Luxembourg), Registered No. B 110242 44, rue de la Vallée, L-2661 Luxembourg, Grand Duchy of Luxembourg. Columbia Threadneedle Investments is the global brand name of the Columbia and Threadneedle group of companies.

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