Giorgio Caputo
Senior Fund Manager & Head of Multi-Asset Value
The JOHCM Credit Income Fund is managed by Giorgio Caputo, Senior Fund Manager and Head of Multi-Asset Value and Adam Gittes, Senior Fund Manager and Head of Credit. They are supported by the members of the New York-based Multi-Asset Value team. The Fund seeks competitive current income through a flexible, global corporate credit allocation appropriate for risk-aware investors.
Fund managers Giorgio Caputo and Adam Gittes seek to build a portfolio that reflects their investment views across the fixed income markets that is consistent with the Fund's objective of preserving capital and delivering returns through a combination of income and modest capital appreciation. They seek to avoid the permanent impairment of capital while identifying investments in companies that produce resilient income streams. The Fund employs a conservative approach that prioritizes capital preservation without reaching for yield.
The Fund employs a highly analytical process that focuses on evaluating an investment's durability and capacity; financial position (particularly cash flow), stability of revenues and cost structure; and corporate and legal structure.
As market conditions change, the volatility and attractiveness of sectors, securities and strategies can change as well. To optimize the Fund's risk/return, the portfolio managers may dynamically adjust the mix of different asset class exposures.
The investment objective of the JOHCM Credit Income Fund (the "Fund") is to preserve capital and deliver returns through a combination of income and modest capital appreciation.
The Fund invests, under normal circumstances, at least 80% of its net assets in fixed income securities across a wide range of maturities. The securities can include investment grade corporate debt, high yield securities, convertible bonds (including contingent convertible bonds), preferred stock, floating-rate debt, collateralized debt, municipal debt, foreign debt (including emerging markets), commercial paper, loans and loan participations. The Fund may also invest up to 10% of its net assets in dividend paying equities of companies of any size.
Senior Fund Manager & Head of Multi-Asset Value
Senior Fund Manager & Head of Credit
Fund size | $5.47mn | ||||||||||||||||
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Strategy size | $6.08mn () | ||||||||||||||||
Fund inception date | 17 August 2020 | ||||||||||||||||
Benchmark | Bloomberg Barclays US Aggregate Index, ICE BofAML BB-B Global High Yield Constrained Index | ||||||||||||||||
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Investment Advisor | JOHCM (USA) Inc. |
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Transfer Agent | Northern Trust |
Custodian | Northern Trust |
Martin Sheen played President Jed Bartlet on the NBC TV show The West Wing in the early 2000s. Often, after wrapping up some stressful or momentous piece of the story, he would say, “What’s next?” We find ourselves as investors constantly asking the same thing. After all, markets are forward looking, and so should we be. A common investing mistake can come from looking backwards and assuming the recent past is a good predictor of what will come. The constant drumbeat in our minds is “What’s next?” and most times, that’s enough to spur meaningful insights on what is to come.
As we embark on 2023, the common worries that pervade the market at the end of 2022 are well established: 1) Are we headed for a recession? (If so, it will be the most highly anticipated recession of our careers), 2) Will inflation get under control, and will the Federal Reserve have to raise rates meaningfully beyond what the market expects? The answers, as always, are never clear until they are retrospective. Perhaps, this one time, the best way to figure out how these two questions resolve themselves in 2023 might be to look back at 2022. Rather than assuming last year will continue, it seems likely this year will have to be very different. One year ago, the Federal Funds rate was at 0%, and the market predicted fewer than four 25 basis point increases throughout the year. That’s right, it’s easy to forget, but the market was predicting Federal Funds of 0.9% at the end of the December Federal Reserve meeting. Instead, the market got a Federal Funds rate of 3.5% higher! Even more importantly, the generic 10-year US Treasury yielded merely 1.75% in January but over 3.75% at the end of the year. This led to the Barclays Aggregate Index falling over 11% during the year, high yield bonds lost over 11%, and investment grade corporate bonds lost over 15%.
As a bond investor, what are the most significant realistic risks this year? The questions above point to the two ever-present risks associated with owning a bond – credit risk and duration risk. If the answer to question 1 above is ‘yes, we are headed for a recession’, then credit risk could be a key driver of negative returns for bonds, but especially for lower quality bonds. In the event of a recession, spreads could move wider by at least 200 basis points for high yield bonds from around 450, where they closed in 2022. In a sell-off induced by a bad recession, high yield spreads typically approach or exceed 1,000 basis points. That doesn’t seem likely at present, but it rarely does. In the same sort of downturn, we would anticipate investment grade bond spreads to stay anchored closer to existing levels. As such, our current bias remains in higher quality names until we are more convinced that no recession is imminent.
Question 2 above has recently gotten the most attention because the market got the answer so terribly wrong for much of 2022. What would it mean to be wrong on rates this year? Last year it meant missing the Federal Funds rate by 350 basis points and the 10-year Treasury yield by over 200 basis points. That magnitude of error seems highly unlikely this year, given that inflation appears to have peaked, and the question now centres more on where the inflation rate settles once it has finished cooling off. The highest estimate we have heard for the terminal Fed Funds rate seems to be 6%, but that’s only 100 basis points higher than the market has currently priced. Said another way, the downside to owning bonds is dramatically smaller now than it was a year ago. Intuitively, the upside to owning them is also much better than it was a year ago – both because yields are much higher and because there’s a real chance that economic conditions force rates lower.
Last year, we became wary first of duration risk and then of credit risk relatively early in the year. As such, the Credit Income fund outperformed (beat the U.S. Aggregate Bond Index by over 4.5%, beat the ICE BAML BB-B Global High Yield Constrained Index by over 4.5%, beat the U.S. Investment Grade Index by nearly 7%). As central banks lift short rates, our fear of duration will wane. We are still cognizant that credit spreads could pose a material risk, so, for the time being, our positioning will probably be on the side of higher in the ratings scale. As
ever, we will be vigilant in our search for data points that disprove this fear, or information that contests are growing comfort with duration. In the meantime, we will continue our never-ending search for idiosyncratic single-name opportunities while wondering “What’s next?”
Sources for all data: JOHCM/Bloomberg (unless otherwise stated).
1 Month Total Return | 3 Month Total Return | YTD Total Return | 1 Year Total Return | Cumulative Since Inception | |
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Institutional Shares Net | -1.25 | 1.58 | 1.99 | -3.90 | -2.23 |
Benchmark | -2.59 | -0.04 | 0.41 | -9.72 | -5.07 |
1 Year | 2 Year | 3 Year | 4 Year | 5 Year | 10 Year | Annualized Since Inception | |
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Institutional Shares Net | -8.42 | -3.62 | -1.77 | ||||
Benchmark | -12.97 | -6.39 | -3.01 |
Jan | Feb | Mar | Apr | May | Jun | Jul | Aug | Sep | Oct | Nov | Dec | Annual |
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Share Class | Gross Expense* | Net Expense* |
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Advisor | 1.70% | 0.69% |
Institutional | 1.60% | 0.59% |
The performance data quoted represents past performance; past performance does not guarantee future results. The investment return and principal value of an investment will fluctuate so that an investor's shares, when redeemed, may be worth more or less than their original cost. The Fund's current performance may be lower or higher than the performance data quoted. Investors may obtain performance information current to the most recent month-end, within 7 business days at www.johcm.com or by calling 866-260-9549 or 312-557-5913.
Returns shown, unless otherwise indicated, are total returns, with dividends and income reinvested. Returns for periods of less than one year are not annualized. Fee waivers are in effect; if they had not been in effect performance would have been lower.
The MSCI EAFE Index (Europe, Australasia, Far East) is a free float-adjusted market capitalization index that is designed to measure the equity market performance of developed markets, excluding the US & Canada. Any Indicies mentioned are unmanaged statistical composites of stock market performance. Investing in an index is not possible.
Historical performance of the International Select Fund for Class II Shares prior to its inception is based on the performance of Class I Shares. The performance of Class II Shares has been adjusted to reflect differences in expenses.
*Expense ratios as stated in the latest prospectus. JOHCM (USA) Inc. has contractually agreed to waive fees and reimburse expenses so that the Net Total Operating Expenses do not exceed the stated amounts until January 28, 2024.
2020 Cash MandatoryéExchangeable Trust | 1.06% |
TripAdvisoré7.00% 15 Jul 2025 | 5.40% |
TripAdvisoré7.00% 15 Jul 2025 | 5.40% |
Annaly Capital Management | 0.56% |
Wesco 7.25% | 4.63% |
Wesco 7.25% | 4.63% |
Liberty Broadband 2.75% 30 Sep 2050 | 4.56% |
Liberty Broadband 2.75% 30 Sep 2050 | 4.56% |
Liberty Latin America 2% 15 Jul 2024 | 3.68% |
Liberty Latin America 2% 15 Jul 2024 | 3.68% |
Fund |
As at noon | Share class | Currency | CUSIP Number | NAV | Change | Change % | Previous | |
JOHCM International Select Fund | 28/03/2023 | Institutional | USD | 46653M849 | 21.10 | 0.06 | 0.29% | 21.04 | |
Investor | USD | 46653M823 | 21.15 | 0.06 | 0.28% | 21.09 | |||
JOHCM Emerging Markets Opportunities Fund | 28/03/2023 | Advisor | USD | 46653M203 | 10.53 | 0.14 | 1.35% | 10.39 | |
Institutional | USD | 46653M104 | 10.56 | 0.15 | 1.44% | 10.41 | |||
Investor | USD | 46653M302 | 10.53 | 0.15 | 1.45% | 10.38 | |||
JOHCM Global Select Fund | 28/03/2023 | Advisor | USD | 46653M807 | 12.37 | 0.01 | 0.08% | 12.36 | |
Institutional | USD | 46653M708 | 12.41 | 0.01 | 0.08% | 12.40 | |||
JOHCM Emerging Markets Small-Mid Cap Equity Fund | 28/03/2023 | Advisor | USD | 46653M500 | 11.46 | 0.05 | 0.44% | 11.41 | |
Institutional | USD | 46653M401 | 11.47 | 0.05 | 0.44% | 11.42 | |||
JOHCM Global Income Builder Fund | 28/03/2023 | Advisor | USD | 46653M799 | 9.73 | 0.01 | 0.10% | 9.72 | |
Institutional | USD | 46653M815 | 9.73 | 0.00 | 0.00% | 9.73 | |||
Investor | USD | 46653M781 | 9.73 | 0.01 | 0.10% | 9.72 | |||
JOHCM International Opportunities Fund | 28/03/2023 | Institutional | USD | 46653M872 | 10.47 | 0.09 | 0.87% | 10.38 | |
JOHCM Credit Income Fund | 28/03/2023 | Institutional | USD | 46653M740 | 8.97 | 0.02 | 0.22% | 8.95 | |
Regnan Global Equity Impact Solutions | 28/03/2023 | Institutional | USD | 46653M716 | 7.20 | -0.01 | -0.14% | 7.21 | |
TSW Large Cap Value Fund | 28/03/2023 | Institutional | USD | 46653M641 | 12.33 | 0.01 | 0.08% | 12.32 | |
TSW High Yield Bond Fund | 28/03/2023 | Institutional | USD | 46653M658 | 8.64 | 0.01 | 0.12% | 8.63 |
The performance data quoted represents past performance; past performance does not guarantee future results. The investment return and principal value of an investment will fluctuate so that an investor's shares, when redeemed, may be worth more or less than their original cost. The Fund's current performance may be lower or higher than the performance data quoted. Investors may obtain performance information current to the most recent month-end, within 7 business days at www.johcm.com or by calling 866-260-9549 or 312-557-5913.
Returns shown, unless otherwise indicated, are total returns, with dividends and income reinvested. Returns for periods of less than one year are not annualized. Fee waivers are in effect; if they had not been in effect performance would have been lower.
The MSCI EAFE Index (Europe, Australasia, Far East) is a free float-adjusted market capitalization index that is designed to measure the equity market performance of developed markets, excluding the US & Canada. Any Indicies mentioned are unmanaged statistical composites of stock market performance. Investing in an index is not possible.
Historical performance of the International Select Fund for Class II Shares prior to its inception is based on the performance of Class I Shares. The performance of Class II Shares has been adjusted to reflect differences in expenses.
*Expense ratios as stated in the latest prospectus. JOHCM (USA) Inc. has contractually agreed to waive fees and reimburse expenses so that the Net Total Operating Expenses do not exceed the stated amounts until January 28, 2024.
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An investor should consider the Fund’s investment objectives, risks, and charges and expenses carefully before investing or sending any money. This and other important information about the Funds can be found in the Fund’s(s) prospectus or summary prospectus which can be obtained at www.johcm.com or by calling 866-260-9549 or 312-557-5913. Please read the prospectus or summary prospectus carefully before investing. The JOHCM Funds are advised by J O Hambro Capital Management Limited and distributed through Foreside Financial Services, LLC, member FINRA. The JOHCM Funds are not FDIC-insured, may lose value, and have no bank guarantee.
Fixed income securities will increase or decrease in value based on changes in interest rates. If rates increase, the value of the Fund’s fixed income securities generally declines. If interest rates fall, the value of fixed income securities generally increase. Long-term fixed income securities or instruments will normally have more price volatility because of this risk than short term fixed income securities or instruments. Below investment grade fixed income securities, also known as “junk bonds,” are not investment grade and are generally considered speculative because they present a greater risk of loss than higher quality debt securities. Investors should note that investments in foreign securities involve additional risks due to currency fluctuations, economic and political conditions, and differences in financial reporting standards. Other risks may include and are not limited to liquidity, loan-related, currency, hedging, derivatives and credit risks.
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