Fund performance (net)
Fund |
Fund (%) |
Index/median (%) |
Aegon Strategic Global Bond Fund* |
-0.23 |
-0.77 |
Aegon High Yield Global Bond Fund* |
0.62 |
-0.18 |
Aegon Investment Grade Global Bond Fund* |
-0.74 |
-1.25 |
Aegon Global Short Dated High Yield Climate Transition Fund** |
0.49 |
0.41 |
Aegon Absolute Return Bond Fund*** |
0.42 |
0.39 |
Aegon Global Short Dated Climate Transition Fund**** |
0.22 |
0.41 |
- Following a strong post-election surge through November, yields on global fixed income assets rose in December.
- This reflected renewed uncertainty about the willingness of Central Banks, especially the US Federal Reserve, to make material cuts in interest rates through the course of 2025.
- As a result, 10-year yields in Treasuries, gilts and bunds all increased, although credit spreads proved relatively resilient.
- At a currency level, euro and particularly sterling credit spreads outperformed the US market during the month.
- The fund benefited from reducing the level of duration risk meaningfully as the month progressed in response to the less supportive tone from major Central Banks.
- Yield curve positioning was positive, with our US 5yr vs 30yr curve steepening position adding value as longer-dated bonds underperformed over the period.
- In Australia, our 3yr vs 10yr curve steepening position also added value, as did our exposure to New Zealand government bonds and Italian BTP futures.
- The allocation to high yield and emerging market debt contributed positively, while our tilt towards European credit vs US credit was also beneficial.
- Our exposure to financials - particularly subordinated financials - performed well alongside holdings in property related names.
- The fund’s outperformance over the month was due partly to our preference for Euro debt, given this area of the market benefited from spread tightening.
- At the same time, our lower exposure to US dollar bonds also added value as US high yield spreads widened amid Fed-induced volatility.
- From a positioning perspective, we continue to focus on income generation while maintaining a defensive positioning to help insulate the portfolio from potential downside risk.
- The negative total return over the month was primarily a function of the move higher in government bond yields.
- The fund’s holding in Nissan added value after reports of merger talks between the company and better rated Honda, while selective real estate and banking names also performed well.
- Longer duration dollar assets suffered in the rates sell-off (led by the US), including our positions in Oracle and Starbucks, among others.
- During the month, the fund purchased hybrid securities from CVS and, following a strong performance, exited the position after a short period.
Please note that from 14 June 2024 changes have been made to this fund in terms of the climate transition categories and allocations set – see the fund page on the website for more details.
- The inverted curve continues to present compelling opportunities to add yield in short-dated bonds.
- We are focused on investing in higher-quality bonds that have elevated coupon rates, which can increase yields and reduce volatility.
- During the month, we increased exposure to certain companies that have solid climate transition characteristics and offer attractive yields
- The Credit module had a solid month, with the majority of gains coming from the collection of hedged corporate bonds, including holdings in Rothesay Life, Lottomatica and Close Brothers.
- Our CDS relative value positions were marginally negative; we saw some losses in our long-risk SES versus short-risk iTraxx Xover where SES assets suffered following its latest earnings announcement.
- The Rates module had a good month, with our long-held US 5yr versus 30yr steepening trade adding value due to weakness in long-dated bonds.
- Our steepening trade in Australia, where we are long 3yr futures versus short 10yr futures, also performed well, as did our new UK inflation trade - long 10yr UK index-linked bonds versus short 10-year UK futures position.
- The Carry module performed well due mainly to demand for short-dated corporate bonds, with our holdings in Nissan, Intercontinental Hotels and RAC among others, contributing positively.
Please note that from 14 June 2024 changes have been made to this fund in terms of the climate transition categories and allocations set – see the fund page on the website for more details.
- At year-end duration was 2.52 years with approximately 0.9 years derived from sterling duration, reflecting a significant overweight compared to a global benchmark.
- The most positive contributors tended to be derived from the fund’s short-dated sterling and euro positions.
- Once again, holdings in real estate, and subordinated financials feature towards the top of the list.
- Examples include the fund’s holdings in Aroundtown, Heimstaden, Virgin Money and Zurich, while our exposure to Glas (Welsh Water) also performed well.
- In contrast higher quality, longer duration holdings were among the main detractors, reflecting the move higher in underlying yields and lower spread cushion.
*Source: Lipper as at 31 December 2024. Performance shown is for the B USD Inc share class.
**Source: Lipper as at 31 December 2024. Performance shown is for the B USD Acc share class. On the 18 December 2023, the name changed from the Aegon Short Dated High Yield Global Bond Fund to the Aegon Global Short Dated High Yield Climate Transition Fund.
***Source: Lipper as at 31 December 2024. Performance shown is for the B GBP Acc share class.
****Source: Lipper as at 31 December 2024. Performance shown is for the S GBP Acc share class. Share class inception 4 March 2021. On the 15 July 2022, the name changed from the Aegon Short Dated Investment Grade Bond Fund to the Aegon Global Short Dated Climate Transition Fund.
Performance drivers discussed within this flash report may be based on preliminary attribution reports, which can differ from final month-end attribution. NAV to NAV, noon prices, income reinvested, net of ongoing charges, excluding entry or exit charges. Past performance is not a guide to future returns. The Funds are incorporated in the following Lipper Global peer groups - Aegon Strategic Global Bond Fund is in the Bond Global sector, Aegon High Yield Global Bond Fund is in the Bond Global High Yield sector. Benchmark and sector median source: Lipper. Aegon Investment Grade Global Bond Fund is measured versus the Barclays Global Aggregate Corporate. Aegon Absolute Return Bond Fund is measured against SONIA 3 Month GBP. Aegon Global Short Dated Climate Transition Fund is measured against SONIA GBP. Aegon Global Short Dated High Yield Climate Transition Fund is measured against SOFR USD.
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The main risks of investing in these funds are:
Credit |
Liquidity |
Counterparty |
Other markets |
Concentration |
Derivatives |
Interest Rates |
Fund charges |
|
Strategic Global Bond Fund |
✘ | ✘ | ✘ | ✘ | ✘ | ✘ | ✘ | |
High Yield Global Bond Fund |
✘ | ✘ | ✘ | ✘ | ✘ | ✘ | ✘ | ✘ |
Investment Grade Global Bond Fund |
✘ | ✘ | ✘ | ✘ | ✘ | ✘ | ||
Global Short Dated High Yield Climate Transition Fund |
✘ | ✘ | ✘ | ✘ | ✘ | ✘ | ✘ | ✘ |
Absolute Return Bond Fund |
✘ | ✘ | ✘ | ✘ | ✘ | ✘ | ||
Global Short Dated Climate Transition Fund |
✘ | ✘ | ✘ | ✘ | ✘ | ✘ | ✘ |
For more information on the risks involved with these funds please see the Prospectus/KIID.
*Source: Lipper as at 31 December 2024. Performance shown is for the B USD Inc share class.
**Source: Lipper as at 31 December 2024. Performance shown is for the B USD Acc share class. On the 18 December 2023, the name changed from the Aegon Short Dated High Yield Global Bond Fund to the Aegon Global Short Dated High Yield Climate Transition Fund.
***Source: Lipper as at 31 December 2024. Performance shown is for the B GBP Acc share class. The benchmark changed from LIBOR to SONIA on or around 9th of December 2021.
****Source: Lipper as at 31 December 2024. Performance shown is for the S GBP Acc share class. Share class inception 4 March 2021. On the 15 July 2022, the name changed from the Aegon Short Dated Investment Grade Bond Fund to the Aegon Global Short Dated Climate Transition Fund.
NAV to NAV, noon prices, income reinvested, net of ongoing charges, excluding entry or exit charges. Past performance is not a guide to future returns. The Funds are incorporated in the following Lipper Global peer groups - Aegon Strategic Global Bond Fund is in the Bond Global sector, Aegon High Yield Global Bond Fund is in the Bond Global High Yield sector. Benchmark and sector median source: Lipper. Aegon Investment Grade Global Bond Fund is measured versus the Barclays Global Aggregate Corporate. Aegon Absolute Return Bond Fund is measured against SONIA 3 Month GBP. Aegon Global Short Dated Climate Transition Fund is measured against SONIA GBP. Aegon Global Short Dated High Yield Climate Transition Fund is actively managed and is not constrained by any benchmark, other than the Bloomberg Global High Yield Corporate 1-5 Year Ba/B Index which is used as a reference point to measure carbon intensity.
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Past performance does not predict future returns. Outcomes, including the payment of income, are not guaranteed.
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