Investment trust insider on New City High Yield – James Carthew: New City’s high-yield, cautious bond fund
It has been over four years since I last looked at CQS New City High Yield (NCYF). The Jersey-based investment company has grown its market value to £253 million from £216 million. It has moved sectors, from UK Equity & Bond Income to Debt – Loans and Bonds where it sits more naturally. It also trades on a higher yield – 7.7% today, up from 6.9%.
Otherwise, it is much as it was, reflecting the consistent and steady approach to running the portfolio of Ian ‘Franco’ Francis’ at New City Investment Managers, part of the CQS group.
The debt sector may not offer yields as high as the Direct Lending, Leasing and Property – Debt sectors but it represents the more conservatively managed end of listed debt funds.
Within NCYF’s peer group, NB Distressed Debt (NBDD) is on the way out – quantitative easing helped kill the distressed debt market as it has depressed default rates. NBDD’s sister fund, NB Global Floating Rate Income (NBLS), remains the largest fund in the sector but is continually repurchasing stock.
The best performer of the past year has been Henderson Diversified Income (HDIV), which stuck to its guns and kept the duration of its portfolio long even when central banks were talking about raising interest rates. The reverse ferret performed by the US Federal Reserve in 2019 has paid off handsomely for HDIV, which also takes the prize for the lowest annual ongoing charges of 0.91%.
NCYF’s yield is the highest in its sector. It helps NCYF maintain its premium rating with the shares trading… read more here