Seeking opportunities at the front-end of the yield curve

Matt Russell, fund manager of the Short Dated Corporate Bond strategy explains why he believes accessing a short-dated corporate bonds solution could be an attractive option for those investors concerned about interest rate rises and volatility in 2023-24.

• We believe short-dated corporate bonds proved their worth in 2022, showing resilience versus other bond assets and limiting the losses caused by higher bond yields (ie increases in interest rates) on fixed income portfolios
• We argue accessing a short-dated corporate bonds solution could be an attractive option for those investors concerned about interest rate rises and volatility in 2023-24 • The M&G Short Dated Corporate Bond Fund is structurally defensive with a low duration (a lower interest rate risk sensitivity) range of 0-3 years; currently the portfolio’s duration is 1.6/1.7 years
• The fund holds nearly 60% in very short dated (0-3 years) corporate bond assets - increasing to almost 90% when we include similar bonds maturing 3-5 years
• Our global team of credit analysts continue to focus on perceived value within financial sector bonds issued by so-called ‘national champions’ – and this still holds despite recent sector uncertainty 

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