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May
2015
European Corporate Bond Fund
31 May 2015
The fund aims to provide long term growth from capital gains and the reinvestment of income generated by
investing predominantly in European investment grade bonds. The fund is actively managed by our
investment teams who may invest in a wide range of bonds (e.g. corporate bonds including high yield
bonds, government backed securities, overseas bonds, index-linked bonds, floating rate notes (FRNs) and
asset backed securities (ABSs) and/or money market instruments) in order to take advantage of
opportunities they have identified. Non euro denominated assets held in the fund will generally be hedged
back to euros.
The value of investments within the fund can fall as well as rise and is not guaranteed - you may get back
less than you pay in. The fund may use derivatives for the purposes of efficient portfolio management,
reduction of risk or to meet its investment objective if this is permitted and appropriate. The value of
overseas assets held in the fund may rise and fall as a result of exchange rate fluctuations.
Fund Manager
Launch Date
Morningstar Rating
Fund Currency
Benchmark
Current Fund Size
Craig MacDonald
25 Sep 2003
****
EUR
iBoxx Euro Corporate All Stocks Index
€3116.3m
Information Ratio
Tracking Error
Volatility
Yield to Maturity
2.76
0.38
2.84%
1.6%
Modified Duration
5.2
SICAV Fund
Bond Fund
Monthly
This document is intended for use by individuals who are familiar with investment terminology. Please contact your financial adviser if you need an
explanation of the terms used. Please note that the breakdowns below do not take into account the economic exposure created by derivative positions.
For a full explanation of specific risks and the overall risk profile of this fund and the shareclasses within it, please refer to the Key Investor Information
Documents and Prospectus which are available on our website – www.standardlifeinvestments.com
Fund Information *
Composition by Maturity
Composition by Credit Rating
Rating
Fund %
Rating
Fund %
AAA
2.0
BB
8.6
AA
6.4
B
0.1
N/R
0.7
A
34.2
BBB
48.0
Composition by Sector
46.7
42.4
8.2
1.9
0.3
0.5
Top Ten Holdings
Fund %
Corporates
Financials
Sovereigns
Not Classified
Collateralised
Fund %
0-5YRS
5-10YRS
10-15YRS
15-20YRS
20-25YRS
25+YRS
52.4
44.7
1.6
0.8
0.5
Bonds
Fund %
Germany (Govt of) 1.5% 2024
General Electrical 0.8% 2022
JPMorgan Chase 2.625% 2021
General Electric 1.25% 2023
Bank of Ireland 2% 2017
Hutchison Whampoa 4.75% 2016
DnB NOR Bank 4.375% 2021
Bharti Airtel 4% 2018
Hutchison Whampoa 1.375% 2021
Great-West Lifeco 2.5% 2023
0.7
0.7
0.6
0.6
0.6
0.6
0.6
0.5
0.5
0.5
Assets in top ten holdings
5.9
Fund Performance *
Price Indexed
135
Performance has been calculated over
the stated period on the share price
performance basis, based on the
institutional shareclass and net of fees.
For your relevant charges please contact
your Standard Life Investments Sales
Representative.
130
125
120
Source: Standard Life Investments
(Fund) and Thomson Datastream
(Benchmark)
115
110
105
100
European Corporate
Bond
May-15
Nov-14
May-14
Nov-13
May-13
Nov-12
May-12
Nov-11
May-11
Nov-10
May-10
95
iBoxx Euro Corporate All
Stocks Index
Cumulative Performance
Source: Standard Life Investments (Fund) and Thomson Datastream (Benchmark)
YTD (%)
1 month (%)
3 months (%)
6 months (%)
1 year (%)
Retail Fund Performance
0.7
-0.6
-1.1
1.0
3.7
Institutional Fund Performance
0.9
-0.6
-1.0
1.3
4.3
iBoxx Euro Corporate All Stocks Index
0.4
-0.4
-1.1
0.9
4.3
3 years (%)
5 years (%)
Since launch (%)
Retail Fund Performance
19.0
29.1
62.8
Institutional Fund Performance
20.9
32.4
76.4
iBoxx Euro Corporate All Stocks Index
19.0
30.1
69.4
Note: Past Performance is not a guide to future performance. The price of shares and the income from them may go down as well as up and
cannot be guaranteed; an investor may receive back less than their original investment.
For full details of the fund's objective, policy, investment and borrowing powers and details of the risks investors need to be aware of, please
refer to the prospectus.
Definitions
Information Ratio - the active return of a portfolio divided by the tracking error.
Tracking Error - the standard deviation of the difference between portfolio and index returns ex-post 3yr.
Volatility - the annualised standard deviation of monthly total returns over the last 36 months.
Yield to Maturity - gives an indication of the total expected return from a bond if it is held to maturity. It reflects both the interest payments made
to the bondholder and any capital gain or loss at maturity. It is based on a snapshot of the portfolio on specified date. It does not include any
impact from charges.
Modified Duration - gives an indication of a bond's sensitivity to a change in interest rates. It is based on a snapshot of the portfolio on specified
date. It does not include any impact from charges.
Not Classified (N/C) may include bonds which do not fall into the specified categories and 'Cash and Other'.
Not Rated (N/R) may include bonds which do not have a rating under iBoxx classification (such bonds may still be rated by S&P and/or Moodys)
and 'Cash and Other'.
Cash and Other - may include bank and building society deposits, other money market instruments such as Certificates of Deposits (CDs),
Floating Rate Notes (FRNs) including Asset Backed Securities (ABSs), Money Market Funds and allowances for tax, dividends and interest due if
appropriate.
Investment Review and Outlook
Market Review
May turned out to be a rollercoaster for
bond investors as bund yields sold off
sharply in the first half the month,
before retracing much of the move as
the month drew to a close. Crowded
long positioning and better economic
data in Europe were the main drivers
for the rise in yields, while central
bank comments about front-loading
bond purchases drove the retracement.
10-year bunds started the month at
+37 basis points (bps), moving above
70 bps mid-month before finishing at
+49. Credit spreads, on the other
hand, widened very marginally. The net
result of these moves was a negative
total return for euro investment grade
credit, with the rise in underlying bund
yields the main driver.
The stalemate in Greek debt
negotiations weighed on spreads, as
did continued issuance at the longer
end of the market. This meant
peripheral credits underperformed and
credit curves steepened, with 10-year
and above issuance underperforming
as the moves at the longer end of the
bund curve discouraged buyers.
Within sectors, energy performed well
on the back of the stabilising oil price,
while insurance underperformed due
to its high share of more volatile long
duration subordinated bonds.
Interestingly, high yield outperformed
investment grade as continued inflows
and its lower sensitivity to rates moves
provided support. At an individual
security level, Vodafone
underperformed as rumours about a
merger with highly-levered Liberty
Global emerged. Meanwhile, RWE
came under further pressure as the
German regulator announced plans to
increase emission charges for coal
power plants.
Activity
We were fairly active in May. We
continued to reduce the overall credit
risk of the portfolio by reducing our
exposure to subordinated financial
debt; this included lower tier two
bonds from Commerzbank and
Nykredit and an additional tier one
issue from SEB. We also cut our
positioning in corporate hybrid debt
(America Movil) and longer-dated
Italian corporate debt (Enel and ENI).
As part of this risk reduction trade, we
also reduced our high yield position in
Petrobras after its strong recovery year
to date.
Our focus in the primary market was
mainly on higher-rated companies and
we purchased new issuance from
General Electric, UBS and Wells Fargo.
Elsewhere, we added Centrica to the
portfolio following the result of the UK
election and increased our exposure to
Energias de Portugal due to its
improving credit profile. Finally, within
lower tier two bank debt, we switched
from longer-dated BNP bonds into
shorter-dated callable bonds from
Societe General for a pick-up in spread
and shortening in spread duration.
Performance
The portfolio delivered a negative
return over the month, performing
broadly in line with the benchmark
index. In terms of active performance,
security selection and off-benchmark
holdings in high yield compensated for
small negative contributions from
duration and curve positioning.
At an individual security level, our
underweight exposure to EDF and
decision to retain our position in
‘fallen angel’ Areva were beneficial.
The French government is looking to
orchestrate a solution to the latter’s
balance sheet problems. Our offbenchmark holding in Petrobras
recovered strongly, while our holding
in Lloyds, in which we have a high
degree of conviction, also performed
well. However, overweight holdings in
subordinated bonds of Aviva and
Allianz cost relative performance.
Outlook & Strategy
We remain constructive on investment
grade credit given the background of
solid fundamentals and supportive
central bank policy. This should
translate into tighter spreads over the
next six months. However, in the near
term, spread performance is
constrained by the situation around
Greece, rates volatility and technical
factors in European credit markets. The
pressure on Greece and its creditors
will increase during the next few weeks
and will weigh on sentiment.
The sudden back up in government
bond yields has taken its toll on credit,
while the increased volatility is
affecting investors’ risk appetite.
Finally, a filled issuance pipeline is
weighing on the market, especially at
the longer end of the maturity
spectrum, where most of the issuance
has happened year-to-date. As these
factors are unlikely to disappear in the
short-term, we will keep the Fund’s risk
profile balanced and wait for a larger
correction to appear.
Other Fund Information
Retail Acc
STPECBA LX
LU0177497491
A0MRSB
Bloomberg
ISIN
WKN
Domicile
Custodian Name
Auditor Name
Retail Dist
STECBAD LX
LU0277136965
A0PCZZ
Institutional Acc
STPECBD LX
LU0177497814
A0MRSC
Institutional Dist
STECBDD LX
LU0455263052
A0YBUL
Luxembourg
The Bank of New York Mellon (Luxembourg) S.A., 2-4 Rue Eugene Ruppert, L-2453 Luxembourg,
Grand Duchy of Luxembourg
PricewaterhouseCoopers S.à r.l., Reviseur d'entreprises 400, route d'Esch, L-1014 Luxembourg,
Grand Duchy of Luxembourg
Reporting Dates
Interim
30 Jun
Annual
31 Dec
Settlement Time
Email
Telephone
Share Price Calculation Time
Dealing Cut Off Time
T+4
luxmb-sli-ta@bnymellon.com
+352 24 525 716
15:00 (Luxembourg time)
13:00 (Luxembourg time)
Currency
EUR
EUR
EUR
*Any data contained herein which is attributed to a third party ("Third Party Data") is the property of (a) third party supplier(s) (the “Owner”) and is
licensed for use by Standard Life**. Third Party Data may not be copied or distributed. Third Party Data is provided “as is” and is not warranted to be
accurate, complete or timely. To the extent permitted by applicable law, none of the Owner, Standard Life** or any other third party (including any
third party involved in providing and/or compiling Third Party Data) shall have any liability for Third Party Data or for any use made of Third Party Data.
Past performance is no guarantee of future results. Neither the Owner nor any other third party sponsors, endorses or promotes the fund or product to
which Third Party Data relates.
**Standard Life means the relevant member of the Standard Life group, being Standard Life plc together with its subsidiaries, subsidiary undertakings
and associated companies (whether direct or indirect) from time to time.
“FTSE®”, "FT-SE®", "Footsie®", [“FTSE4Good®” and “techMARK] are trade marks jointly owned by the London Stock Exchange Plc and The Financial
Times Limited and are used by FTSE International Limited (“FTSE”) under licence. [“All-World®”, “All- Share®” and “All-Small®” are trade marks of
FTSE.]
The Fund is not in any way sponsored, endorsed, sold or promoted by FTSE International Limited (“FTSE”), by the London Stock Exchange Plc (the
“Exchange”), Euronext N.V. (“Euronext”), The Financial Times Limited (“FT”), European Public Real Estate Association (“EPRA”) or the National
Association of Real Estate Investment Trusts (“NAREIT”) (together the “Licensor Parties”) and none of the Licensor Parties make any warranty or
representation whatsoever, expressly or impliedly, either as to the results to be obtained from the use of the FTSE EPRA NAREIT Developed Index (the
“Index”) and/or the figure at which the said Index stands at any particular time on any particular day or otherwise. The Index is compiled and
calculated by FTSE. However, none of the Licensor Parties shall be liable (whether in negligence or otherwise) to any person for any error in the Index
and none of the Licensor Parties shall be under any obligation to advise any person of any error therein.
“FTSE®” is a trade mark of the Exchange and the FT, “NAREIT®” is a trade mark of the National Association of Real Estate Investment Trusts and
“EPRA®” is a trade mark of EPRA and all are used by FTSE under licence.”
Additional Information for Switzerland : The prospectus, the key investor information documents, the articles of incorporation, the annual and semiannual report in German, and further information can be obtained free of charge from the representative in Switzerland: Carnegie Fund Services S.A.,
11, rue du Général-Dufour, CH-1204 Geneva, Switzerland, web: www.carnegie-fund-services.ch. The Swiss paying agent is: Banque Cantonale de
Genève, 17, quai de l’Ile, CH-1204 Geneva. The last share prices can be found on www.fundinfo.com.
To find out more about our fund range, visit our website or alternatively speak to your
usual contact at Standard Life Investments.
www.standardlifeinvestments.com
Standard Life Investments Limited is registered in Scotland (SC123321) at 1 George Street, Edinburgh EH2 2LL.
Standard Life Investments Limited is authorised and regulated by the Financial Conduct Authority.
Standard Life Investments Global SICAV is an umbrella type investment company with variable capital registered in Luxembourg (no. B78797) at 2-4, rue Eugéne Ruppert,
L-2453 Luxembourg, Grand Duchy of Luxembourg.
Calls may be monitored and/or recorded to protect both you and us and help with our training.
www.standardlifeinvestments.com
© 2015 Standard Life
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