Ninepoint Diversified Bond Fund
is a North American-focused bond fund with a flexible mandate allowing the
manager to invest across the capital structure. The fund takes an absolute
return approach and aims for a 4% to 6% return, net of fees over a rolling
three-year period, regardless of interest rates
The fund’s management team is headed by fixed-income veteran
Mark Wisniewski. Their disciplined investment process blends top-down macro views,
thematic tactical trades, and bottom-up security selection. Management
tools at their disposal include the ability to alter interest-rate
sensitivity, currency exposure, security mix, and credit quality either to
capture potential upside or to reduce or manage risk.
Given the current credit environment, the manager is more defensively
positioned. Duration is about four years, compared to roughly 7.5 years for
the broader Canadian bond market. Yield to maturity is also significantly
higher than the benchmark.
The fund is heavily weighted toward corporate bonds, with a 73% weighting,
and 16% in government bonds. Average credit quality of the portfolio is
BBB. Given the current market, the managers don’t expect to dramatically
change that positioning but will continue to improve credit quality where
possible. They are also exploring ways to participate in the upside of any
potential flight-to-safety trade in government bonds while avoiding the
downside associated with the lower yield and higher duration.
Fund performance has outpaced its peers and benchmark since Mr. Wisniewski
took the reins a year or so ago. With its defensive positioning, I’d expect
it to lag in a bond rally but outperform in volatile periods.
Another interesting feature of this fund is that it is available in a
corporate class structure, which makes it more tax friendly for
The biggest concern I have is the fund’s cost. Its 2.10% MER is well above
the category average. I’m not sure I would use this fund as my only
fixed-income exposure, but I do see it as possibly playing a role in a
well-diversified portfolio. I would expect it to help reduce overall
volatility while helping improve returns over the long-term.
Ninepoint Diversified Bond Fund
NinePoint Partners LLP
Global Fixed Income
Mark Wisniewski, Chris Cockeram
NPP018 (Front-end load)
Dave Paterson, CFA, is a money manager and an expert on investment fund
research and due diligence on a variety of investment products.
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Commissions, trailing commissions, management fees and expenses all may be
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before investing. Mutual funds are not guaranteed and are not covered by
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insurer. There can be no assurances that the fund will be able to maintain
its net asset value per security at a constant amount or that the full
amount of your investment in the fund will be returned to you. Fund values
change frequently and past performance may not be repeated. No guarantee of
performance is made or implied. This article is for information purposes
only and is not intended as personalized investment advice.