The fund currently yields 3.4% and may be a good option for investors who target a stable income. Atlanticomnium is an independent Geneva-based fund management company that has specialised in credit investing since it was founded in 1976, and runs the fund for GAM. Managers Anthony Smouha, Grégoire Mivelaz and Patrick Smouha aim to provide investors with a high income, paid annually, from high-quality bonds.

They achieve this by lending to investment-grade companies, ideally for 10 years or more. Instead of buying their senior bonds, which are first in line for repayment if a company defaults on their debt, the managers opt for their junior or subordinate bonds. These tend to be slightly riskier than senior bonds because investors are further down the list to get their money back if a company goes bust. But the idea behind this fund is that investors get a higher yield without a corresponding increase in risk, because the managers invest only in quality companies.

They use top-down and bottom-up research to identify profitable, growing and cash-generative companies. They look for companies that are doing well, in the belief that they are unlikely to default on their debt commitments whether they are senior, junior or subordinate. They say this approach is more akin to an equity fund manager’s, because it means focusing on the health of the company rather than what would happen if something went wrong, as bond managers tend to.

September 2020