Fixed income markets have been subject to extreme volatility since the beginning of the year and the outbreak of Covid-19. Credit spreads have widened at the fastest pace on record and are still left at very elevated levels despite the recent retracement. In March, corporate bond portfolios experienced the most severe monthly drawdown in history.
After a strong relative performance during the first year, the Flexible Bond fund experienced a larger-than-expected drawdown in March, in line with bond market performance. About half of this drawdown has been recovered over recent weeks. The fund has also taken advantage of highly attractive conditions in the primary market, with new issues contributing well to recent performance.
The SILEX Flexible Bond Fund is a fixed income fund aiming to generate attractive risk-adjusted returns by allocating capital to the main global liquid fixed income market segments. It does so by integrating human convictions into SPARK in order to generate efficient allocations across segments and minimise risk. This note details the positioning and behaviour of the fund in an unprecedented market environment.