NB Global Monthly Income Fund Ltd Results analysis from Kepler Trust Intelligence
22 Settembre 2022 - 8:01AM
RNS Non-Regulatory
TIDMNBMI
NB Global Monthly Income Fund Ltd
22 September 2022
NB Global Monthly Income Fund (NBMI)
22/09/2022
Results analysis from Kepler Trust Intelligence
NB Global Monthly Income Fund (NBMI) has reported a NAV total
return of -8.92% for the first half of the 2022 financial year,
ending 30/06/2022, and a share price total return of -9.27%. During
the period fixed income markets saw sell-offs in duration and
credit. NBMI's diversified portfolio performed better than the high
yield market, the ICE BofA Global High Yield Constrained Index
returning -14.88%.
At the beginning of the year the board announced a target
dividend of GBP0.00415 per share per month (5.25% of NAV on an
annualised basis). Thanks to increases in central banks' base
rates, this target was raised to GBP0.00443 per share in April or
5.8% of NAV annualised, and then again to 6.75% annualised in July
(GBP0.00467 per share per month).
Kepler View
NB Global Monthly Income Fund (NBMI) is essentially a highly
sophisticated strategic bond fund that uses the flexibility
afforded by the closed-ended structure to invest in various
non-conventional fixed income sectors usually restricted to
institutions. This helps the portfolio to generate a high ungeared
yield. As of the end of July, the portfolio had 26.3% in private
debt, 11.7% in special situations and 11.1% in CLOs, sectors in
which the typical bond fund won't or can't invest. A significant
proportion of the portfolio is held in leveraged loans (29% at the
end of August), which contributes to the floating rate
component.
The results for H1 2022 were disappointing in absolute terms as
bonds and equities sold off significantly. Having a low duration
helped NBMI relative to global bond markets, and floating rate
instruments continue to make up the majority of the portfolio,
although they have fallen slightly from 70% to 66%. This should
provide some cushion against the effects of any further rate
increases by central banks, and could lead to corresponding
increases in the dividends on offer. The high yield focus of the
portfolio detracted from performance, and given 100% of the
portfolio had a high yield rating as of 31/07/2022, credit will
continue to be a key risk factor in the future. However, the credit
exposure brings with it highly attractive income, and the current
dividend when annualised amounts to a yield of 7.15% on the current
share price (thanks in part to the discount). The manager notes
that default rates remain low in high yield, and believes they are
likely to remain so based on their bottom-up analysis of
issuers.
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