Mirabaud - Global High Yield Bonds N cap. USD

Performance update

April delivered an incredible round trip in markets. The announcement of President Trump's tariff regime caused a significant correction with investors bracing for a US recession, followed by an equally rapid recovery once he backtracked and the worst of the tariffs were suspended for 90 days. Overall, credit markets were broadly flat for the month, with only CCC and cyclical credits posting significant negative returns. Global high yield closed fractionally down on the month, as wider spreads were matched with lower underlying government rates and positive coupon return.

Within the fund, the negative relative performance came from our overweight allocations to subordinated financials and the credit derivatives we had added to protect the portfolio from volatility and further downside risk. On a sector basis, we saw positive relative performance from security selection in consumer discretionary and an underweight exposure to healthcare. Conversely, overweights in financials and energy generated negative relative contributions.

Portfolio activity

We responded to the tariff announcement by moving to more cautious positioning – we added credit hedges, increased duration and reduced credit risk, rotating out of CCC and cyclicals into BB and more defensive sectors. Later in the month, we reduced those hedges and added back some cyclical risk that had sold off to recession levels.