Same as it ever was…
Ian “Franco” Francis, the manager of CQS New City High Yield (NCYF), says that, since QuotedData last published nothing much has changed, which is what we think investors should expect from this “conservative and boring” fund (see QuotedData’s March 2018 initiation note for explanation). However, we note that NCYF offers a compelling yield (7.3%) and has beaten inflation as measured by the consumer price index, Libor and the MSCI UK Index by significant margins over the last 10 years (see pages 13 and 14); all while providing low volatility returns. Furthermore, the manager says that the market continues to offer opportunities, but it is important that investors remain selective (Ian sees 10–15 issues a week, but will buy about one a month for the fund) and position themselves appropriately, as the economic cycle is advanced and markets are buoyant. In this regard, NCYF’s portfolio has a relatively short duration, to protect against rising interest rates and to allow the manager to take advantage of opportunities in a market downturn.
CQS New City High Yield Fund is a closed-end investment company. Co. invests predominantly in fixed income securities, including, but not limited to, preference shares, loan stocks, corporate bonds (convertible and/or redeemable) and government stocks. Co. also invests in equities and other income yielding securities. Co. has appointed CQS (UK) LLP, a subsidiary of CQS Cayman Limited Partnership, as Co.'s alternative investment fund manager.
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