The Big Interview: Eric Vanraes – EI Sturdza Investment Funds
bond funds (the EI Sturdza Strategic Euro Bond fund, Strategic Global Bond fund and Strategic Quality Emerging Bond fund). The first is Libor flat because it is a low risk fund. The global is Libor plus 100 and the EM is Libor plus 200.
“The Euro bond fund is absolute return and the two others are total return. I’ve been asked why don’t you want to put more yield in your bond fund to have more performance, [or] a better ranking in Morningstar, and so on. I say no, I don’t want [that].
‘Buy low quality, low liquidity’
“If you want to have a better ranking to have a five star [rating], you need to deliver performance. To deliver performance today you need higher yield. If you want a higher yield, then you have to buy low quality, low liquidity and also you have to buy spread. And spread has a huge correlation with equity.”
At first glance, Vanraes comments seem extraordinary, but there is a method to his philosophy and what he believes is the often unmentioned and overlooked correlation between bonds and equities.
“At the end of the day if you buy a bond fund with good performance then you buy an equity fund,” he says.
“But you don’t understand that you buy an equity fund. I have the privilege to belong to the Sturdza Group. The equity range is just great and they deliver a lot of performance.
“So, I say to everybody – and this is our DNA – [that] if you want performance, then buy our equity funds. They are fantastic. But I am the bond guy and I don’t want to have a correlation to equities.”