In February, the PCGA USD share class returned 1.54% compared to the benchmark Bloomberg Global Aggregate Corporate Index’s 1.58%. The GBP share class returned a similar 1.55% compared to the respective GBP-hedged index return of 1.57%.
The fund’s absolute performance in February was driven by a rally in US bond yields with the 7-year US Treasury (having a similar duration to the index) decreasing by 33bps.
Risk asset performance was marked by divergence between the strong performance of Europe while US notably underperformed. The S&P 500 finished the month down 1.3%, while the Eurostoxx 50, supported by strong performance in banks and defence stocks, finished the month up 3.5%. It was a similar story for benchmark credit spreads, with the Bloomberg USD Corp Agg Index wider by 8bps to 86bps and its European counterpart finishing the month unchanged at 90bps.
Since its 10 October inception, PCGA’s GBP share class has cumulatively outperformed the benchmark by 2.53% net (3.22% gross) with an absolute return of 16.02% net of fees (16.72% gross) compared to the index return of 13.49%.
PCGA’s annual volatility is similar to the index (5.0% vs. 4.8%) and, accordingly, PCGA’s since inception Sharpe Ratio of 1.5 times has been superior to the index’s 1.0 times. PCGA’s current weighted average yield to expected maturity is 5.52% compared to the index’s 4.54%. PCGA’s weighted-average credit rating of A is higher than the index’s BBB+ rating. The weighted average rating of PCGA’s active (as opposed to passive) exposures is also A.
According to data from JP Morgan, February saw €80bn printed in €IG credit. Similar to January, this was well above the average of recent years, with €47bn being the average of the 2019-2024 period. The recurring theme so far in 2025 is the prevalence of so-called “Reverse Yankee” deals – bonds issued in Euro by non-European Issuers. In February, the fund participated in two such deals brought by Johnson & Johnson and Kraft-Heinz Foods.
February saw $147bn issued in US IG credit to reach $335bn year to date, although this is still considerably (14%) behind the same period last year when $389bn was issued. Technically, we are now heading into a period of considerable net negative supply as the explosive issuance volumes at the start of the COVID-19 pandemic start to redeem.
Throughout February the fund participated in 32 deals. This included 15 corporate deals, 13 financial and 4 SSA deals.
