Exploiting the Changing Bond Markets | Liontrust Sustainable Investment team | Liontrust Asset Management PLC

Exploiting the Changing Bond Markets

Liontrust Global Fixed Income

Risks and opportunities for bond markets

There has been energetic debate over recent years about whether the decades-long bond bull market is coming to an end. The view of the Liontrust Global Fixed Income team – made up of David Roberts, Phil Milburn and Donald Phillips – is simple: yields will rise as inflationary pressures increase and, as we are facing an extended period in which bond beta (market risk) is more dangerous, funds need to be flexible enough to navigate this landscape. 

The team launched the Liontrust Strategic Bond Fund in April 2018 with this environment in mind: the Fund’s mandate allows the fund managers to buy when markets are cheap and risk under-priced, and sell when expensive and overpriced.

On this page, you can read the latest views and insights of the team, listen to their Shaken and Stirred podcast and find out more about the team, their investment process and their performance.

Recent insights from the team

Be prepared to take the right kind of bond risk
Phil Milburn

With interest rates expected to stay lower for longer than necessary and inflation heating up, Phil Milburn warns that bond investors must take risk in the right places if they are to avoid getting burned. Read more

10 trades for the New Year (revisited after six turbulent months)
David Roberts

Back in January, David Roberts identified 10 high-quality sovereign trades. Nearly six months later and with the world living with Covid-19, David assesses how successful these trades have been and what they now say about the outlook for bond markets. Read more

10 macro and micro fixed income trades for summer
Global Fixed Income team
Active management is largely about taking opportunities and the Global Fixed Income team highlight ten potential alpha sources in their funds for the summer months, across macro trades, investment grade and high yield. Read more
GFI Quarterly: Reasons to be cheerful (as well as fearful)
Phil Milburn

Covid-19 uncertainty has lowered confidence in economic forecasts. But Phil Milburn explains why there are reasons to be cheerful as well as fearful and where the team is finding investment opportunities in investment grade and high yield. Read more

The income case for quality high yield
Phil Milburn & Donald Phillips
With widespread cuts and suspensions to dividends by equities, Donald Phillips and Phil Milburn propose the quality end of high yield as a potential asset class for income investors. Read more

The Shaken and Stirred podcast

Shaken and Stirred - Phil Milburn

Phil Milburn shares his insights into the world of bonds with candour, sharp analysis and contrarian thinking. Phil, who is Head of Investment Strategy of the Global Fixed Income team at Liontrust, gives his views on economics, markets and anything else he finds interesting and intriguing. 

Howis the Liontrust Global Fixed Income team differentiated?

  • David Roberts, Phil Milburn and Donald Phillips have more than 60 years of combined investment experience and have all worked together before joining Liontrust at the start of 2018. David, Phil and Donald have long track records of managing bond funds.

  • Decision making within the team is streamlined because it consists of only three experienced managers. The team does not have an investment committee or analysts, resulting in a concentrated portfolio of the managers’ best ideas in bond markets.

  • The investment process is designed to be flexible to enable the fund managers to buy when bond markets are cheap and risk is underpriced and to sell when markets are expensive and risk is overpriced. The managers only commit cash to the market when they believe investors will receive a return that justifies the risk they are taking.

  • The fund managers seek to take advantage of market inefficiencies through understanding the economic environment, bottom up stock analysis and flexibility over duration, credit, sector and geographical allocations. They invest on the basis that value and fundamentals reassert themselves over time.

Meet the experienced fund management team

The Global Fixed Income team - David Roberts, Phil Milburn & Donald Phillips

David Roberts, Phil Milburn and Donald Phillips, who all joined Liontrust in early 2018, have more than 60 years of joint investment experience. Before joining Liontrust, David and Phil worked together at Kames Capital for 14 years, where David was Head of the Fixed Income team and Phil was Head of Investment Strategy. They launched one of the first strategic bond funds in 2003 and have been investing in high yield on a global basis since 2003. Donald was previously an investment manager in the Credit team at Baillie Gifford and worked with David and Phil at Kames Capital for three years from 2005 to 2008. He was co-manager of the Baillie Gifford High Yield Bond Fund from June 2010 to 2017 and the US High yield strategy.

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The Liontrust Global Fixed Income process

The fund managers believe fixed income markets are inefficient and there are myriad ways of adding value to investors’ portfolios. The inefficiencies are caused by many market protagonists who are not price sensitive, ranging from the macroeconomic distortions caused by central banks to the idiosyncratic scenarios when companies need to raise debt finance and price accordingly. The Liontrust Global Fixed Income investment process is designed to take advantage of these inefficiencies through a thorough understanding of the economic environment and detailed analysis of individual companies and bonds. The process uses the same framework to garner a thorough understanding of the economic environment and for company analysis: fundamentals, valuations and technicals (FVT). These three factors are examined regardless of what the managers are analysing, from a duration position to an investment in a speculative grade rated company.


In judging whether a company is an attractive long-term investment, the managers analyse the following factors, which they call PRISM:


Liontrust GFI PRISM  

Protections: operational and contractual, such as structure and covenants


Risks: credit, business and market


Interest cover: leverage and other key ratios


Sustainability: of cash flows and environmental, social and governance (ESG) factors


Motivations: of management and shareholders


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Further information

Key risks

Past performance is not a guide to future performance. Do remember that the value of an investment and the income generated from them can fall as well as rise and is not guaranteed, therefore, you may not get back the amount originally invested and potentially risk total loss of capital. Investment in Funds managed by the Global Fixed Income team involves foreign currencies and may be subject to fluctuations in value due to movements in exchange rates. The value of fixed income securities will fall if the issuer is unable to repay its debt or has its credit rating reduced. Generally, the higher the perceived credit risk of the issuer, the higher the rate of interest. Bond markets may be subject to reduced liquidity. The Funds may invest in emerging markets/soft currencies and in financial derivative instruments, both of which may have the effect of increasing volatility.
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