Scott is happy to run one of the riskier funds in the sector at this point in the credit cycle, by targeting distressed bonds low down the credit spectrum but with a chance of recovery.
The flexibility of his mandate means he can take a lot diversification with his holdings, which should help spread the risks. The ability to short bonds does add to the overall risk profile of the fund, though should enable it to benefit somewhat in falling markets.
The typical holding period is around one year, so positions can turn around quickly, especially in the more opportunistic trades, which gives an overall portfolio turnover of around 75-80 per cent.
Since its launch in December 2019, the fund has returned 30 per cent (vs 10 per cent for the sector). The fund has an ongoing charge of 0.75 per cent and a running yield of 6.85 per cent.
Scott has demonstrated excellent stock picking ability throughout his career, and we feel he is perfectly positioned to take advantage of opportunities in a unique time for the asset class.
Darius McDermott is managing director, FundCalibre
