Liontrust GF High Yield Bond Fund is manufactured by Liontrust Fund Partners LLP and represented in Malta by MeDirect Bank (Malta) plc.
The Fund (C5 sterling accumulation class) returned 1.5%* in sterling terms in Q1 2025 while the ICE Bank of America Merrill Lynch Global High Yield Index (GBP hedged) comparator benchmark returned 1.3% and the average return for the IA Sterling High Yield reference sector was 1.2%. The primary B5 US dollar share class returned 1.1%, while the ICE Bank of America Merrill Lynch Global High Yield Index (USD hedged) comparator benchmark returned 1.2% and the average return for the EAA Fund USD High Yield Bond (Morningstar) reference sector was 1.4%.
We also compare the Fund’s performance to a leading Global High Yield ETF (seeking to outperform by 1.5% a year) †. The Fund’s C5 sterling shares class return was slightly ahead of the ETF in Q1 and has now outperformed by over seven percentage points since inception (June 2018).
The global high yield market returned 1.23% (US dollar terms) in the first quarter of 2025. The US high yield market produced a 0.95% return. In Europe, the high yield market returned 1.02. BBs were best performing part of the market at 1.5%, with single B slightly behind, and a modest 0.25% return for CCCs.
While the Fund outperformed its index over the quarter, there were no particular stand out credit stories in the quarter.
The main change in portfolio shape was an increase in US dollar denominated bonds. The spread differential between Euro and US dollar high yield has for some time favoured Euro-denominated; however, this changed through the course of Q1, particularly in single B rated bonds. In the process of adding to US dollar bonds, we took positions in auto lending business Credit Acceptance (actually a former holding), energy midstream (which means it has limited direct oil price risk) company GLP and building services company Brundage Bone (also a former holding).
It is also worth noting the growth in the fund during the period, with AUM now above $120m Trade activity.
Outlook
The timing of this quarterly commentary is significant given that, on day two of the new quarter, President Trump announced a new tariff regime for countries exporting to the US. The ongoing impact on global stock markets is for all to see. The high yield market has also seen volatility, but the drawdown at the market level so far has been ~25-30% of that seen in major equity indices, in line with what we would expect.
Unsurprisingly, high yield bonds issued by cyclical companies have been most impacted, particularly autos. As a reminder, where we buy cyclical companies, we seek to avoid concentrations of thematic risk. Therefore, we do not have significant exposures to energy, mining, chemicals. The fund has around 4.9% in autos, all of which is in companies involved in the supply of parts. The largest individual position is Goodyear Tires, at 1.2%. The other four auto parts exposures in the Fund will be impacted, but we view them as resilient. Elsewhere, individual cyclical bonds are not part of a thematic exposure, i.e. are idiosyncratic and all have a few years before any refinancing.
As an indication of stock specific risk in the Fund, the following table shows the ten highest yielding bonds in the fund as of 10th April. The top ten yielders account for11% of the Fund. There is a wide array of sectors, some cyclical, some not. Of course, this is not to say only the top ten yielding bonds have credit risk, but I think it’s a good way to illustrate the idiosyncratic nature of the fund.
Liontrust Key risks & Disclaimers:
Past performance is not a guide to future performance. Do remember that the value of an investment and the income generated from them can fall as well as rise and is not guaranteed, therefore, you may not get back the amount originally invested and potentially risk total loss of capital.
The issue of units/shares in Liontrust Funds may be subject to an initial charge, which will have an impact on the realisable value of the investment, particularly in the short term. Investments should always be considered as long term.
Investment in the GF High Yield Bond Fund involves foreign currencies and may be subject to fluctuations in value due to movements in exchange rates. The value of fixed income securities will fall if the issuer is unable to repay its debt or has its credit rating reduced. Generally, the higher the perceived credit risk of the issuer, the higher the rate of interest. Bond markets may be subject to reduced liquidity. The Fund may invest in emerging markets/soft currencies and in financial derivative instruments, both of which may have the effect of increasing volatility. The Fund may invest in derivatives. The use of derivatives may create leverage or gearing. A relatively small movement in the value of a derivative’s underlying investment may have a larger impact, positive or negative, on the value of a fund than if the underlying investment was held instead.
Issued by Liontrust Fund Partners LLP (2 Savoy Court, London WC2R 0EZ), authorised and regulated in the UK by the Financial Conduct Authority (FRN 518165) to undertake regulated investment business.
This document should not be construed as advice for investment in any product or security mentioned, an offer to buy or sell units/shares of Funds mentioned, or a solicitation to purchase securities in any company or investment product. Examples of stocks are provided for general information only to demonstrate our investment philosophy. It contains information and analysis that is believed to be accurate at the time of publication, but is subject to change without notice. Whilst care has been taken in compiling the content of this document, no representation or warranty, express or implied, is made by Liontrust as to its accuracy or completeness, including for external sources (which may have been used) which have not been verified. It should not be copied, faxed, reproduced, divulged or distributed, in whole or in part, without the express written consent of Liontrust. Always research your own investments and (if you are not a professional or a financial adviser) consult suitability with a regulated financial adviser before investing.
MeDirect Disclaimers:
This information has been accurately reproduced, as received from Liontrust Fund Partners LLP. No information has been omitted which would render the reproduced information inaccurate or misleading. This information is being distributed by MeDirect Bank (Malta) plc to its customers. The information contained in this document is for general information purposes only and is not intended to provide legal or other professional advice nor does it commit MeDirect Bank (Malta) plc to any obligation whatsoever. The information available in this document is not intended to be a suggestion, recommendation or solicitation to buy, hold or sell, any securities and is not guaranteed as to accuracy or completeness.
The financial instrument discussed in the document is intended for retail clients however, it may not be suitable for all investors and investors must make their own informed decisions and seek their own advice regarding the appropriateness of investing in financial instruments or implementing strategies discussed herein.
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