Julien Houdain, head of global fixed income at Schroders
The Schroder Strategic Bond fund won the Sterling Strategic Bond category at the Investment Week Fund Manager of the Year Awards 2026. Here, Julien Houdain, head of global fixed income at Schroders, highlights contributors to performance over the past three years, what sets the fund apart and how it may fit in an investor's portfolio.
Winning the Sterling Strategic Bond category reflects three years of consistently strong performance. What has driven that consistency, and what do you believe set the Schroder Strategic Bond fund apart over this period?
Consistency in delivering positive performance outcomes has come from combining a genuinely flexible investment approach with disciplined risk management.
Over the period, fixed income markets have been driven by sharp shifts in inflation, interest rate expectations and economic sentiment. Schroder Strategic Bond's unconstrained approach has allowed us to respond actively to changing conditions, adjusting duration, credit and sector exposure rather than being tied to a benchmark. Our valuation-led approach has been central to this, enabling us to move into more defensive assets when corporate credit looked stretched and reduce interest rate risk during periods of heightened political uncertainty.
What sets the fund apart is not simply taking more risk, but being selective about where risk is rewarded. The team's research-led process, global fixed income resource and focus on downside protection helps us navigate volatile conditions while still participating in attractive income and capital growth opportunities.
The most recent 12-month period carries significant weight in the judging process. How did you navigate the market environment in the year to January 2026, and what were the key drivers of performance? How did you manage risk?
It has been an interesting and demanding market environment. Volatility has fallen, but uncertainty remains elevated, and bond markets have become increasingly differentiated. Schroder Strategic Bond's unconstrained, flexible approach has worked well in this backdrop, allowing us to use multiple alpha levers across a broad investment universe to target the most attractive risk-adjusted returns. Rather than relying on a single market view, our ability to assess a range of possible outcomes has been central to performance.
The fund generated positive alpha across its main return drivers, with dynamic asset allocation a key contributor and consistent with our top-down process. By identifying shifts in market narratives and acting when pricing moved away from our highest-conviction views, we were able to add value. One such example was when we increased high yield exposure around ‘Liberation Day', when markets had become overly pessimistic on the economic outlook, and benefited as sentiment improved.
With investment grade credit spreads historically tight, issuer selectivity was especially important. Careful security selection helped improve the return profile within the asset class, while active duration management also contributed positively, helping manage overall portfolio risk and capture opportunities across curves and regions.
Looking ahead through the rest of 2026 and beyond, what is your outlook for fixed income and where do you see the most compelling opportunities for investors?
Looking through the rest of 2026 and beyond, we think flexibility will remain essential. This is a long horizon in the current environment and our views can shift quickly as market narratives change. For now, we see a more divergent global backdrop, with some areas of the economy proving resilient while fiscal sustainability remains a growing vulnerability. Markets may not focus on debt dynamics every day, but fiscal risk can quickly move from the background to the centre of attention.
In credit, the story is still more about carry than capital gains. Credit spreads are tight, but there is not yet an obvious catalyst for a meaningful widening. Near-term technicals should remain supportive as issuance typically slows over the summer, although conditions could become more challenging as earnings season begins and primary markets reopen. Key risks include heavier AI-related issuance from hyperscalers, a more hawkish Federal Reserve than markets expect, and any renewed energy shock that pushes inflation expectations higher.
Overall, all-in yields remain attractive, but we believe an active approach is needed to capture the best opportunities and manage risks as they emerge.
How could the Schroder Strategic Bond fund fit in an investor's wider portfolio?
The Schroder Strategic Bond fund is a flexible, unconstrained fixed income strategy. Its approach allows the team to seek the best risk-adjusted opportunities across corporate credit, securitised credit and government bonds, without being tied to a benchmark. It can also access non-UK opportunities, with all currency risk hedged back into sterling.
This flexibility means the fund aims to generate income and capital growth while seeking to manage downside risk, adopting more defensive positioning when valuations look less compelling. By drawing on a broad opportunity set and taking a dynamic approach to navigating changing market conditions, it offers characteristics that differ from more constrained or single-sector bond strategies.
As a result, the fund may represent one approach to gaining diversified fixed income exposure within a wider portfolio – whether used alongside other fixed income investments or as a broader fixed income building block, depending on an investor's own objectives and circumstances.
For more on the Investment Week Fund Manager of the Year Awards 2026, click here.
