Analysis of the Nomura Funds Ireland – Global Dynamic Bond Fund
19 FEB, 2024
By Andrea Sepúlveda from LatamSelf
The Nomura Funds Ireland – Global Dynamic Bond Fund stands out as a fascinating subject of study. Based in Ireland and launched in 2015, it is distinguished by its flexible and global investment strategy in the bond sector. During this analysis, we will examine in detail its structure, management and yield objectives, highlighting its distinctive features and the opportunities it offers to investors.
Description of the Nomura Funds Ireland - Global Dynamic Bond Fund
The Nomura Funds Ireland – Global Dynamic Bond Fund is a fund domiciled in Ireland, launched in 2015, with the aim of investing in flexible global bonds. The fund's strategy aims to achieve income and capital growth by investing primarily in a wide range of bonds issued by companies, governments and other financial institutions around the world.
This fund belongs to the Nomura house, one of the leading investment management companies in the world, based in Tokyo with additional investment offices worldwide, including Singapore, Hong Kong, London and New York. In figures, at the end of 2023, Nomura manages over 530 billion USD globally, with more than 220 portfolio managers allocated worldwide and has been operating in Europe for over 30 years, although it has been present in Japan for over 50 years.
- Fund Management: The Global Dynamic fund is managed by a Nomura investment team led by Richard Hodges, head of unconstrained fixed income at Nomura UK, with over 30 years of experience in the debt securities market.
- Investment Philosophy: The fund's philosophy is based on a global macroeconomic view - top down, supported by the global team of Nomura, which contributes with its own opinion on interest rates, currencies and credit spreads worldwide. Subsequently, this approach will be integrated with the bottom-up approach of the fund's team, which conducts a fundamental analysis of issuers, seeking to exploit relative value opportunities among the different segments of the bond market. The investment process combines strategic asset allocation, tactical security selection and active management of duration and currency.
- Portfolio Flexibility: The investment team enjoys wide flexibility, so there are no geographical restrictions for the bond instruments that can be included in the portfolio, although there are some considerations such as a maximum limit of 30% for issuers from emerging markets and a preference for purchasing bonds rated by at least one of the rating agencies (Standard & Poor's or Moody's).
- Return Objectives: being an actively managed fund, it does not refer to any market index, which means that the portfolio manager is only bound to the declared objectives and investment policies of the fund.
- Fund Size: at the end of December 2023, the fund had more than 2.4 billion USD in assets under management.
Evolution of the strategy Nomura Funds Ireland – Global Dynamic Bond Fund
| 2019 | 2020 | 2021 | 2022 | 2023 | YTD | |
| Nomura Finds Ireland plc Global Dynamic Bond Fund Class I USD | 12.77% | 8.71% | 2.69% | -4.86% | 2.94% | 2.94% |
| Global Flexible Bond | 3.05% | 4.41% | -2.11% | -0.46% | 2.06% | -0.66% |
| Fund quartile | 1st | 1st | 1st | 4th | 2nd | 2nd |
| Funds in category | 540 | 628 | 757 | 794 | 796 | 874 |
Note: Past returns do not predict future returns. The fund's returns may increase or decrease due to exchange rate fluctuations.
Considering the annual returns of the fund, we can observe that the fund records positive returns in almost all years, except for 2022, even in 2021, when the index of global flexible funds decreased. In general, this shows that there is consistency in the fund's credit selection process.
Risk Measures of the fund Nomura Funds Ireland – Global Dynamic Bond Fund Class I USD
Looking at the risk ratios of the fund, it can be noticed that they show good fund management and an adequate selection of debt instruments by the investment team.
As for the 5-year Alpha, it is very positive, which means that the investment team has been able to add value compared to the most appropriate comparison category and, as mentioned, does well in the selection of instruments in which it invests. As for the market Beta, this is less than 1 in the 5 years, which indicates that it is a more conservative fund in its category.
The distribution of the fund's investments by credit quality shows that the fund ended the previous year with a propensity towards lower-rated BBB debt, more high yield. The fund also has about 20% in high-quality debt, with ratings equal to or higher than A. It is important to note that the fund has maintained about 11% in other assets and cash. The fund's main positions are instruments in developed countries, mainly in the United Kingdom and the United States, which represent more than a third of the portfolio.
Conclusions
Advantages:
- Experienced manager and team.
- Large institutional fund.
- Global diversification.
- Flexibility to adapt to market changes.
- Proven alpha and track record.
Disadvantages:
- For investors who like to "keep control", such an actively managed fund can be concerning.
