Rathbone Funds update - Rathbone Ethical Bond Fund 27.04.20

The massive fall in West Texas Intermediate oil prices dominated headlines last week, as massive oversupply and under-demand pushed prices negative for the first time in history. Storage tanks, tankers and bowsers are in short supply, so producers are virtually paying buyers to take it off their hands; that is going to be expensive. Concerns about the oil price also spread to credit, which was wobbling at the start of the week.

A couple of weeks ago, the US Federal Reserve announced it would buy downgraded investment grade credit – known as ‘fallen angels’ – and last week the European Central Bank (ECB) followed suit. The ECB said it will buy anything that was investment grade before 7 April. That provided a bit of support for high-yield markets towards the end of the week and some names stabilised.

However, the economic data coming through is generally very bad. The PMIs announced last week were extremely weak and unemployment keeps rising, so there’s risk here still.

Generally, we weren’t that active on the funds last week. In Strategic Bond, we bought some Tesco bonds, and both Strategic and Ethical Bond received an allocation of a new Jupiter Asset Management issue. We’ve previously bought some risk at deep discounts to make tactical gains, but markets seem to have now consolidated.

We’ll stay in regular touch to let you know how we’re managing the funds and to answer any questions you may have.

We have written this update with retail investors in mind, so please feel free to share this information with any clients who you believe will benefit from it.

This is a financial promotion relating to a specific fund. Any views and opinions are those of the investment manager, and coverage of any assets held must be taken in the context of the constitution of the fund and in no way reflects an investment recommendation. Past performance should not be seen as an indication of future performance. The value of investments may go down as well as up and you may not get back your original investment. Source performance data, Financial Express, single price (mid), net income re-invested.