The Corporate Credit Bond Portfolio (CCB) is a global fixed income portfolio composed of investment grade, subordinated, perpetual, high yield and emerging market bonds. The Investment strategy is based on a bottom-up approach with the objective of reaching a 6% annualized yield by allocating, if and when possible, an equal weighting in the above fixed income segments. The overall portfolio rating would target the BB level, but would lie between B to A rated bonds.
The CCB has returned a + 3.88% in March 2016, bringing the YTD performance at + 0.12%.
The first quarter of 2016 saw tremendous swings in investor sentiment. It began with the fear of a devaluation of China and other export nations; and continued with falling oil price leading to balance-of-payment crisis of commodity exporters and a broad wave of defaults in the US shale gas industry. The storm was averted, and some short positions were covered in March. Most riskier bond segments alike experienced recoveries. Going forward, a re-opening of the Emerging Market primary market would be a confirmation that the investor sentiment has turned positive. In the meantime, we expect the market to remain very selective.
We haven't made any changes to our portfolio. The PHBS 6.625% perpetual bond has been called on the 29th of March and we shall consider an alternative investment in April.
The Russian and Latam bonds have stabilized in March and we look for potential gains in Q2 2016.