Aegon Fixed Income Flash Report
See below for this month's Fixed Income Fund performance and positioning information*.

Fund performance (net)

 

Fund

Fund (%)

Sector median (%)

Aegon Strategic Bond Fund

1.92

0.96

Aegon High Yield Bond Fund

1.47

1.03

Aegon Investment Grade Bond Fund

1.46

0.58

Aegon Sterling Corporate Bond Fund

0.76

0.58

Aegon Ethical Corporate Bond Fund

0.81

0.58
Fixed income market backdrop

 

  • February’s US economic data releases continued to disappoint, following the unexpectedly low Q4 GDP data at the end of January.

  • This led to a sharp decline in US Treasury yields, with the 10yr and 2yr Treasuries, falling by 31bps and 21bps respectively. In contrast, European and UK data largely exceeded expectations. Although Gilt and Bund yields also fell, it was not to the same extent as Treasuries.

  • Against that backdrop, credit spreads widened, with credit generally underperforming sovereigns. However, rate sensitive sectors such as property performed better, supported by falling yields.

  • There was, however, little material shift in interest rate expectations; with just one 25bps cut from the Fed expected by end June and a further cut by year end.   
Aegon Strategic Bond Fund
  • Strong bottom-up security selection was a key driver over the period, exploiting opportunities across investment grade, high yield and emerging markets.

  • Tighter credit spreads favoured a lower level of overall credit market risk (beta) as sentiment weakened into month end.

  • Additional duration risk and a bias towards steeper yield curves was beneficial with exposure to US and Canadian interest rates being a particular positive.

        

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Aegon High Yield Bond Fund
  • Despite the barrage of headlines related to tariffs and politics, the high yield market held steady, benefiting from rate movements and continued coupon payments.

  • Security selection was the primary driver of outperformance across all rating categories.

  • By region and currency, the fund's preference for Europe/UK contributed positively to outperformance, as EUR and GBP fund holdings outpaced the overall market.

  • We continue to focus on income generation while maintaining defensive positioning to help insulate the portfolio from potential downside risk.

          

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Aegon Investment Grade Bond Fund
  • Performance was supported by our holdings in US dollar and Euro denominated bonds, as falling US yields outperforming those in Europe and the UK, whilst Euro credit spreads outperformed sterling.

  • Headline duration fluctuated between 6.7 and 6.3 years, which is longer than the reference sterling investment grade index duration of just below 6yrs.  Spread duration was stable at 4.2yrs.

  • The best individual stock performances were typically from US dollar and Euro holdings within the real estate and banking sectors, including Societe Generale, Intesa, and Aroundtown.

  • We rotated existing holdings in the secondary market, while being less active in new issuances. We increased exposure to Metro Bank and Longstone Finance Plc and took profits on holdings such as Mobico Group and CEC Bank.  

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Aegon Sterling Corporate Bond Fund
  • There were no material changes to the top-down positioning of the portfolio over the month. The headline duration ended the month at approximately 5.8 years.

  • The best individual stock performances continued to be in the water sector, with Thames having a particularly strong month due to reports of acquisition interest. Positive fundamental developments for Metro bank also led to outperformance.

  • The fund added a position in Carlsberg through new issuance, which was held for a short time before exiting. We also sold / reduced positions in US real estate name Realty Income and Verizon. 

 

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Aegon Ethical Corporate Bond Fund
  • There were no significant changes to the top-down shape of the portfolio over the month. The fund's headline duration ended the month at approximately 5.7 years.

  • The best individual stock performances were typically within the broad utility sector, including holdings in Southern Water, and Orsted.

  • It was a quieter month for stock specific changes. We sold Assura bonds (UK healthcare property group) which performed well following news of a potential sale of the company to KKR. Believing this was reflected in the price, we exited the Assura holding and used the proceeds to fund a new holding in global real estate company Unibail-Rodamco-Westfield. 

   

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*Source: Lipper as at 28 February 2025, noon prices, NAV to NAV income reinvested, net of ongoing charges, excluding entry or exit charges, net of 20% income tax in periods before 06 April 2017, £ returns, B Accumulation share class. The primary share class has changed from A to B with effect from 31 December 2013.

 

For the Aegon Ethical Corporate Bond Fund: Investors are invited to compare the Fund’s performance against the performance of other funds within the Investment Association Sterling Corporate Bond Sector. Comparison of the Fund against this Sector will give investors an indication of how the Fund is performing compared with Funds investing in a similar but not identical investment universe and comprising ethical and non-ethically screened funds, demonstrating the value of the Fund’s ethical screen against non-ethically screened funds. For the Aegon High Yield Bond Fund: Investors are invited to compare the Fund’s performance against the performance of other funds within the Investment Association Sterling High Yield Bond Sector. Comparison of the Fund against this Sector will give investors an indication of how the Fund is performing compared with Funds investing in a similar but not identical investment universe. For the Aegon Strategic Bond Fund: Investors are invited to compare the Fund’s performance against the performance of other funds within the Investment Association Strategic Bond Sector. Comparison of the Fund against this Sector will give investors an indication of how the Fund is performing compared with Funds investing in a similar but not identical investment universe. For the Aegon Sterling Corporate Bond Fund and the Aegon Investment Grade Bond Fund: Investors are invited to compare the Fund’s performance against the performance of other funds within the Investment Association Sterling Corporate Bond Sector. Comparison of the Fund against this Sector will give investors an indication of how the Fund is performing compared with Funds investing in a similar but not identical investment universe.


The above comparisons should be performed over at least a 7-year period to provide the most useful long-term comparison. These numbers can be found on the fund factsheet at www.aegonam.com.


General references to markets and indices are to be considered as general market commentary only and (i) is not to be considered as a comparison of fund performance against a benchmark; and (ii) the index or indices do not operate as a performance target and the fund's portfolio is not constrained by the index or indices.

For Professional Clients only and not to be distributed to or relied upon by retail clients.


This is a marketing communication. Please refer to the Prospectus of the UCITS and to the KIID before making any final investment decisions. The relevant documents can be found at aegonam.com. The principal risk of this product is the loss of capital.

Past performance does not predict future returns. Outcomes, including the payment of income, are not guaranteed.

Opinions and/or example trades/securities represent our understanding of markets both current and historical and are used to promote Aegon Asset Management's investment management capabilities: they are not investment recommendations, research or advice. Sources used are deemed reliable by Aegon Asset Management at the time of writing. Please note that this marketing is not prepared in accordance with legal requirements designed to promote the independence of investment research, and is not subject to any prohibition on dealing by Aegon Asset Management or its employees ahead of its publication.

Fund Charges are taken from income but will be taken from capital where income is insufficient to cover charges, except the Aegon High Yield Bond Fund where the fund charges are deducted from capital which has the effect of increasing income distributions but constraining capital growth.

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