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 1.7%* in sterling terms in Q4 2025 while the ICE Bank of America Merrill Lynch Global High Yield Index (GBP hedged) comparator benchmark returned 1.2% and the average return for the IA Sterling High Yield reference sector was 1.2%. The primary B5 US dollar share class returned 1.7%, while the ICE Bank of America Merrill Lynch Global High Yield Index (USD hedged) comparator benchmark returned 1.3% and the average return for the EAA Fund USD High Yield Bond (Morningstar) reference sector was 1.1%.
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 ahead of the ETF in Q4 and has now outperformed by over nine percentage points since inception (June 2018).
The global high yield market returned 1.3% (US dollar terms) in the fourth quarter of 2025 and 8.5% for the full year.
The US high yield market produced a 1.4% return. In Europe, the high yield market returned 1.1% (US dollars). Double-Bs and single-Bs were the best performing part of the market by rating, both returning 1.5% and 1.5%, whereas CCCs underperformed, returning -1.1% for the quarter.
During the quarter, the portfolio again benefited from a positive credit event. Kennedy Wilson, a global real estate investment manager and operator focused on residential, office, and mixed-use assets across the US, Europe, and the UK, received a take-private buyout proposal from a consortium led by its CEO and Fairfax Financial. The offer represented a premium of over 35% to the prevailing share price and covered all outstanding shares not already owned by the group. The consortium already owns approximately 31% of the company, and the proposal is fully financed with no financing condition, which has increased investor confidence in the likelihood of completion. The 2031 bonds we hold have since traded around 2.5 points higher than pre-announcement levels, and given our view that there remains further upside, we increased the position during the period.
Primary market activity picked up earlier in the quarter but slowed materially heading into the Christmas holiday period. Issuance from single-B rated issuers increased, and demand was strong, reflecting investors’ appetite for higher-yielding opportunities. We participated in six new issues: SoftBank hybrid bonds (USD), Synergy Infrastructure (USD), Centre Parcs (GBP), Versant (USD), Ziggo (USD), and Ion Platforms (EUR). We have an established investment history with SoftBank, Ziggo, and Centre Parcs and viewed these transactions as offering attractive relative value. The remaining issuers included two debut names. In terms of ratings, all issuers were single-B, with the exception of Versant, which is rated BB. Primary market participation was funded through recycling capital from tightly priced BB-rated credits, where we believed value had largely been exhausted.
Overall, the portfolio remained defensively positioned and, given our emphasis on active idiosyncratic risk management and stock selection, these factors collectively contributed to the Fund’s strong performance during the quarter.
Outlook
Looking ahead, the global high yield market enters 2026 with a more constructive macroeconomic backdrop than during recent periods of tightening. Inflation across developed markets is expected to be better anchored, allowing central banks to move gradually from restrictive policy settings towards a more neutral stance. This environment is broadly supportive for high yield, combining easing financial conditions with still-resilient corporate revenues.
Within this context, global high yield valuations appear tight but broadly stable. Spreads in both US and European high yield are near recent lows, limiting the scope for further broad-based compression and increasing the importance of carry and coupon income as the primary drivers of returns and as a meaningful buffer against volatility. All-in yields for the asset class remain attractive relative to other risk assets.
From a technical perspective, primary markets remain open for higher-quality high yield issuers, while lower-quality borrowers continue to rely on amend-and-extend transactions or private capital solutions. While default expectations remain manageable, stress remains concentrated among highly levered issuers and sectors facing structural change. With less valuation cushion, dispersion is rising, and performance is likely to be increasingly driven by issuer fundamentals, balance sheet quality and capital structure positioning rather than market beta, reinforcing the value of active credit selection.
With our disciplined focus on idiosyncratic risk and avoidance of concentrated thematic or cyclical exposures, we believe the Fund is well positioned to benefit in this environment. We believe the Fund’s current yield of 6.4% in USD (6.5% in GBP, 4.9% in EUR) remains attractive from a risk/reward perspective.
*Source: Financial Express, C5 share class, total return, net of fees and interest reinvested. As at 31.12.25. The primary share class for this Fund is in US dollars (B5) but we are showing the C5 sterling-hedged class to compare against the IA Sterling High Yield sector. Discrete data is not available for ten full 12-month periods due to the launch date of the portfolio.
†While the managers of the Fund seek to outperform a leading Global High Yield ETF by 1.5% a year net of fees over rolling three years, this is not a formal objective. There can be no guarantees this will be achieved over the stated time period. The formal objective of the Fund can be found in the Prospectus.
Key Features of the Liontrust GF High Yield Bond 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.
If you invest in this product you may lose some or all of the money you invest. The value of your investment may go down as well as up. A commission or sales fee may be charged at the time of the initial purchase for an investment. Any income you get from this investment may go down as well as up. This product may be affected by changes in currency exchange rate movements thereby affecting your investment return therefrom. The performance figures quoted refer to the past and past performance is not a guarantee of future performance or a reliable guide to future performance. Any decision to invest should always be based upon the details contained in the Prospectus and Key Information Document (KID), which may be obtained from MeDirect Bank (Malta) plc.
