In a move to limit exposure to higher-risk credits, Oyens & Van Eeghen recently reduced their allocation to high-yield to neutral, and also focus more on quality now within the asset class.
“We have added the Kempen Euro High Yield Fund, which has a conservative approach focusing on BB credits,” says Van Wechem. “Normally we wouldn’t buy a new fund without a track record, but we know the team and their investment process very well [they also manage Kempen’s euro IG credit funds] so we were comfortable with investing in this strategy from launch.”
The other big shock that lies in waiting to hit fixed income markets is central banks reducing monetary stimulus and raising rates. Van Wechem prefers not to be a passive onlooker while this scenario unfolds. Instead, Oyens & Van Eeghen manages interest rate risk independently.
“We control the overall duration of our portfolios with an overlay of interest rate futures on the German and US curves,” says Van Wechem.
Understandably, the Dutchman doesn’t want his bond managers to mess up his carefully crafted duration exposure by taking big duration bets themselves.
What does he think, then, about the one-stop-shop fixed income solutions that have been so popular with many of his peers in Europe this year?
“The move towards unconstrained funds in fixed income is logical. It’s all about taking opportunities in a wide range of different interest rate, credit and currency risks and build a robust portfolio. Basically, it’s just what we are doing ourselves and we use external managers as building blocks in this strategy.”