HSBC GIF Euro High Yield Bond AC |
by Jeana Marie Doubell
HSBC Euro High Yield Bond’s lead manager, Philippe Igigabel, continues to follow a proven and disciplined investment approach. The fund retains its Morningstar Medallist Rating of Gold for cheaper share classes, while pricier share classes are rated Bronze and Neutral. Igigabel has been a hallmark of stability here for over 20 years. His uncompromising focus on risk and valuations requires a sufficiently attractive risk premium before he commits to raising the portfolio’s level of credit risk. This disciplined philosophy, combined with strong security selection, is key to the strategy’s appeal (the fund has not had any exposure to defaults since its inception in 2003). The firm's global credit team is among the larger and more experienced in the industry, numbering 45 analysts with an average of 20 years of experience. Given the large number of European issuers in the fund’s universe, there is a heavier reliance on the 16-strong European credit analyst team, which has also been very stable over time. The strategy’s opportunity set spans the full credit-rating spectrum, allowing the manager to exploit opportunities beyond the high-yield universe. For example, the fund’s 61% stake in investment-grade debt at the end of 2019, driven largely by a stake in BBB rated subordinated financial bonds, helped to cushion the blow of the coronavirus pandemic crisis in 2020’s first quarter. Given its valuation-conscious nature, it’s not surprising to see the fund lag in momentum-driven high-yield market rallies or periods of low dispersion in the credit markets, as it did in 2021. On the other hand, the manager’s risk-aware approach stood the strategy in good stead in 2022’s bear market. Since the start of 2023, the fund has struggled amidst a sell-off in financial-sector bonds, a favorite feeding ground of the manager. Nonetheless, driven by a consistent and disciplined approach, this strategy has repeatedly proven its worth; landing in the top half of the EUR high-yield Morningstar Category for 12 of the past 15 calendar years. |
Morningstar Pillars | |
People | High |
Parent | Average |
Process | High |
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