Why is your fund a ‘fund to watch' and how could it work in an investor's portfolio?
The Aegon Investment Grade Bond Fund offers a distinctive approach. It is concentrated, yet diversified across issuers, sectors and geographies, and is not constrained by an index or benchmark – providing flexibility to capture the best opportunities.
The fund aims to provide investors with a portfolio that delivers alpha from global investment grade credit markets and to minimise exposure to generic credit market risk, especially in times of historically low spreads. Ideas are generated from a large and diverse investment universe. Supported by a global, highly skilled credit research team, we select unique investment opportunities that focus on generating alpha from credit.
This differentiated approach is evident from its strong track record, having delivered top quartile performance versus the IA GBP Corporate Bond Sector and outperformance of the iBoxx GBP Corporate and Collateralised Index since launch in 2006*.
The fund can act as a core investment grade/fixed income holding, while also complementing low-cost vehicles that provide generic investment grade credit risk (beta) exposure (e.g. ETFs), creating a balanced allocation to investment grade credit.
Can you give an overview of the team running the fund and your investment process?
The fund's strength lies in its highly rated, seasoned portfolio managers, Alexander Pelteshki and Rory Sandilands, who are supported by extensive credit research resources and Aegon AM's global fixed income platform.
Alex brings 18 years' experience managing investment grade, strategic and core plus fixed income portfolios, combined with sell side and equity research experience from roles at UBS and ING Bank and specialist expertise of the Financial sector. He has received endorsement and awards from several industry bodies.
Rory harnesses 26 years' credit market experience spanning a wide range of credit cycles and market events, through his role at Aegon AM and former sell-side roles at Goldman Sachs and Merrill Lynch. His longstanding credit expertise has led to a record of strong performance in Aegon's investment grade, short-dated and absolute return portfolios.
Together, they draw on research from a global team of 24 credit analysts conducting deep bottom-up analysis of individual credit issuers, and insights from macro specialists and the wider global fixed income platform of 142 professionals**.
What do you see as the big opportunities and risks for your strategy?
We believe the current market environment is ideal for the active, bottom-up focused approach of the Aegon investment Grade Bond Fund.
The period immediately following the global financial crisis (GFC) was characterised by rock-bottom interest rates and central bank quantitative easing (QE). The result was low dispersion between strong and weak borrowers and a lack of ‘income' in corporate bonds. That period of financial repression is now over, marked by the significant repricing of fixed income markets in late 2022, and we are now in a prime era for active corporate bond fund management and the return of income. This environment is particularly fruitful for the Aegon Investment Grade Bond Fund which seeks to uncover alpha opportunities in both sterling and global corporate bond markets.
In the last 2-3 years, market volatility and dispersion have increased. Markets are, once again, favouring companies with strong, disciplined corporate management while penalising those that thrived only in an era of easy money. All-in-yields from investment grade bond markets remain attractive, but with credit spreads at such tight levels, there is less spread compensation to protect investors from negative headlines or credit events.
The opportunity for the fund currently arises from the increased dispersion, where our research-intensive process and a high conviction approach can be best used to differentiate opportunities and avoid the pitfalls of index constraints and excessive credit market beta at this stage in the cycle.
Can you identify a couple of key investment opportunities you are playing at the moment in the portfolio?
Bond markets continue to face an uncertain macroeconomic backdrop, with labour market weakness and fiscal policy risk. This backdrop requires a degree of caution. The market is still characterised by a compressed level of generic credit spreads. However, we have witnessed some recent, albeit short-lived, bouts of volatility and spread widening, which will make security selection crucial.
We continue to identify attractive opportunities across currencies and geographies. The fund has c40-45% of its bond exposure invested in sterling denominated corporates, with c55-60% in Euro, US and Canadian Dollar credits.
Credit quality is tilted towards lower rated credit, with a bias to shorter-dated exposures. We continue to favour select high yield and subordinated financials, which have performed well year-to-date, including issuers such as UK challenger bank, Metrobank. We also still see opportunities and performance from our exposures in several REIT names. However, this is a sector where we continue to be very selective given a backdrop of bond tender activity.
Overall, it is the careful selection of individual credits and bonds that is driving our portfolio and risk positioning at this point in the cycle, rather than broad themes.
*Source: Lipper as at 31 October 2025. B (Acc) GBP share class, NAV to NAV, noon prices, income reinvested, net of ongoing charges, excluding entry or exit charges. Past performance is not a guide to future performance. Outcomes, including the payment of income, are not guaranteed.
**Source: Aegon Asset Management as at 30 September 2025.
Important information
All data is sourced to Aegon Asset Management unless otherwise stated. The document is accurate at the time of writing but is subject to change without notice.
Aegon Asset Management UK plc is authorised and regulated by the Financial Conduct Authority.
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