Crown ratings: The bond funds that have stood the test of time

Bonds have had a difficult decade as rate rises, inflation shocks and credit scares made consistency hard to come by. And yet a small group of fixed-income funds managed to hold an FE fundinfo Crown Rating of five for the majority of the past 10 years.

Updated biannually, crown ratings assess three-year fund performance across alpha, volatility and consistency of returns. The top 10% of funds earn five crowns, signalling above-average stock selection, consistent benchmark outperformance and lower risk.

In this final instalment of Trustnet's crown ratings series, we screen the two bond sectors with the longest-reigning funds – IA Specialist Bond and IA Sterling Strategic Bond – for the strategies with a current five-crown rating that have had a top rating for the most time since 2016.

Four funds shared the top spot, each holding five crowns in 12 of the 20 periods since 2016, corresponding to 60% of the decade.

The largest by some distance is Algebris Financial Credit, a €16.6bn IA Specialist Bond fund with an ongoing charge of 0.58% managed by FE fundinfo Alpha Manager Sebastiano Pirro.

It spent 2016 to 2021 predominantly between four and five crowns, holding a top ranking in every period from the end of 2019 through to end-2021. It suffered some dips in 2022 and 2023 but has held a five-crown rating since the end of 2024.

Over three years, it returned 37.2%, the strongest figure among the funds in this screen.

Its portfolio is distributed between 69% in global fixed interest, 16% in UK fixed interest  and the remainder in money market instruments.

The £279.7m AXA Managed Income held five crowns in every period from mid-2016 to end-2018, then fell sharply to one crown throughout 2019 and 2020 before recovering, holding five crowns in every period from the end of 2021 to today.

Over three years it returned 26.6%, and over one year 6.1%. The fund's largest sector allocation is financials at 40.3%, followed by industrials at 23.8% and asset and mortgage-backed securities at 18.3%. UK fixed interest accounts for 63.5% of assets, with global fixed interest at 33%.

The £436.8m Jupiter Monthly Income Bond fund managed by Alpha Manager Hilary Blandy also made the list above. It had a six-year unbroken run with five crowns from mid-2016 through to the end of 2021, before falling to one crown across 2022 and 2023, then recovering to five by end-2024.

It has a FundCalibre ‘Elite’ rating thanks to its “simple short-duration approach [which] reduces both volatility and risk.”

Even if credit spreads and/or interest rates rise, the fund’s short-duration nature means it can quickly reinvest maturing cash at new rates, FundCalibre analysts explained.

“Blandy is a highly experienced manager and she has done a great job with this fund so far. The monthly income payment is also a nice feature, and when combined with the fund’s yield, makes this an attractive option for income seekers.”

The final spot went to Quilter Investors Diversified Bond, a £405.7m IA Sterling Strategic Bond fund with the lowest ongoing charge in this screen at 0.45%. It has crown data for 80% of the decade and within that window it held five crowns in 12 periods, matching the others at the top of the table.

The fund holds 83.5% in global fixed interest and 8.4% in money market instruments, with financials the dominant sector at 63.5%.

Just behind, Janus Henderson Multi Asset Credit took fifth place with five crowns in 11 of the 20 periods assessed. The £670m IA Specialist Bond fund – the second-largest on the list – is co-run by Colin Fleury, John Lloyd and Alpha Manager Tim Elliot.

Its crown history has been more volatile than those above, alternating between four and five crowns for much of the decade, with a dip to one crown across 2019 and 2020 and again in 2022, interspersed with five-crown stretches in 2016 to 2018, 2021 and 2023 to 2025.

GAM Star Credit Opportunities rounds out the list, with five crowns in 10 of 20 periods –half the decade. It targets income and moderate capital growth by investing in the subordinated debt of predominantly investment-grade issuers, operating on the premise that high-quality companies rarely default on their junior debt.

Its portfolio leans heavily towards financials, including banks and insurers, with non-UK bonds hedged back to sterling.

RSMR rates it as a satellite holding within a broader fixed income allocation, citing the team's experience and the fund's low sensitivity to interest rate movements.

Previously in Trustnet's Crown ratings series, we covered: IA Global, mixed-asset sectors and specialist funds.