Winnersrationale

A combination of a highly active approach to security selection and use of hedging tools to protect against downside risks has resulted in consistent outperformance for Nomura’s Global Dynamic Bond Fund.

In the 12 months to November 2021, the Morningstar five-star rated fund returned 1.74% compared to -1.34% for the J.P. Morgan Government Global Bond Index in what was a volatile period for global fixed income markets. On a three- and five-year annualised basis, the Nomura fund returned 9.96% and 7.74%, respectively. The J.P. Morgan index returned 4.65% and 3.40% over the same time frames, respectively.

Much of that performance can be attributed to the US$4.9 billion in assets under management fund’s “go anywhere” approach, which allows for allocations anywhere across global markets and the credit curve. The fund’s positions, based on top-down views by the strategy’s managers over an 18- to 24-month time horizon, are then hedged via equity index put options and other derivatives.

The fund’s managers have proved their mettle during times of market volatility. At the start of 2020, for example, they surmised that the then nascent outbreak of coronavirus in China would have profound implications for the global economy and markets. As a result, the Global Dynamic Bond Fund’s managers sought to hedge against downside risks by increasing the overall duration of the fund and taking safe haven positions in US Treasuries. The fund was also able to profit by trading in and out of the primary issuance of a wide array of investment-grade names at the height of the COVID-19 crisis last year.

Nomura’s Global Dynamic Bond Fund subsequently finished 2020 with a return of 12.18%, marking one of the strategy’s stronger years in terms of performance.

A more recent position taken by the fund managers was in Russian government local currency debt, which has benefited from a recent surge in global commodity prices, with the exposure to the ruble hedged via FX options.

Nomura’s global bond strategy has one of the most experienced portfolio management teams in the market. Richard Hodges, the fund’s lead portfolio manager, has more than three decades of experience at both the Japanese group and previous firms, including Legal & General Investment Management. He is supported by four specialists with expertise in asset allocation, credit selection, convertible bond selection and product design, as well as Nomura’s wider team of over 130 fixed-income professionals globally.

The fund’s impressive performance in recent years has been reflected in the strength of its distribution across private banking platforms in Asia. Inflows into the Global Dynamic Bond fund surged during the period under consideration for the Asset Management Awards for Excellence as the number of private banking platforms carrying the strategy in the region tripled.

Nomura Asset Management is Asian Private Banker’s Best Fund Provider – Global Bond.