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Morgan Stanley Sterling Corporate Bond Class F - Income (GBP)

Sell:116.49p Buy:116.49p Change: 0.12p (0.10%)
Prices as at 26 February 2021
Sell:116.49p
Buy:116.49p
Change: 0.12p (0.10%)
You can buy or sell holdings in this fund through a Stocks and Shares ISA, Lifetime ISA, SIPP or Fund and Share Account
Prices as at 26 February 2021
Sell:116.49p
Buy:116.49p
Change: 0.12p (0.10%)
Prices as at 26 February 2021
You can buy or sell holdings in this fund through a Stocks and Shares ISA, Lifetime ISA, SIPP or Fund and Share Account
The selling price currently displayed is higher than the buying price. This can occur temporarily for a variety of reasons; shortly before the market opens, after the market closes or because of extraordinary price volatility during the trading day.

Our view on this Fund

This fund is on the Wealth Shortlist of funds our analysts believe have the potential to outperform their peers over the long term. However, this is not a recommendation to buy.

This is a no nonsense corporate bond fund run by a well-resourced team, led by Richard Ford and Dipen Patel. They invest in a wide selection of high-quality corporate bonds with the aim to generate income and some growth over the long term.

It's run in a more conservative way to some corporate bond funds. This means it could perform a little better when bond markets fall, but also lag behind when they rise rapidly. There are no guarantees though.

This doesn't mean the managers are afraid to take a view. They'll invest more aggressively when attractive yields are on offer, but will sit back and be more defensive if they think the risks outweigh the rewards. We like this flexible approach. The fund is also available to HL clients with low ongoing charges.

Our view on the sector

Funds in this sector invest mainly in 'investment grade bonds'. These are issued by companies that are more likely to be able to repay their debts to bondholders. As such, they tend to offer lower yields than bonds issued by companies that are less likely to be able to pay off their debts. Corporate bonds have generally performed well since the 2008 financial crisis. With interest rates on cash so low, they've appealed to income investors. This has pushed up bond prices, but means their yields have also fallen. Some suggest there is now less value in this area of the market. We think that with interest rates likely to stay lower for longer, a corporate bond fund could be a good addition to a diversified portfolio invested to generate income.

Performance Analysis

The fund's relatively defensive approach means it has tended to underperform a rising market, but provide some shelter during tougher periods. It performed particularly well around the financial crisis in 2008, for example. Having provided some shelter during difficult market conditions, the managers have also captured some gains as markets have performed well again in recent years. As a long-term investment, the fund has done well for investors who've patiently stayed invested. We think the managers have the potential to serve long-term investors well, but there are no guarantees and past performance is not a guide to the future.

Investment Philosophy

The managers think superior long-term returns are generated by holding better quality bonds. They'll provide a lower return than riskier ones when the economy's doing well. But they think the higher-quality bonds will more than make up for this by falling less when bond markets sell off.

Process and Portfolio Construction

The managers start by coming up with their outlook for the wider global economy. This includes their views on growth, interest rates, and inflation among other things.

Then they carry out detailed research on individual companies and bonds. They try to make sure companies have the ability to pay the full interest on their bonds and make the capital repayments too. They also take account of valuations to avoid bonds that could be too expensive, or where the yield is too low to offset the risks they've identified. We think this analysis of individual companies and bonds is one of the team's strengths.

The fund invests heavily in the UK, but does include some global bonds. The mangers remove the effect of changes in exchange rates on overseas bonds by using derivatives, which can increase risk.

question mark Manager Track Record Based on HL Quantitative Research

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  • IA £ Corporate Bond
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Fund Track Record

26/02/16 to 26/02/17 26/02/17 to 26/02/18 26/02/18 to 26/02/19 26/02/19 to 26/02/20 26/02/20 to 26/02/21
Annual return 11.37% 2.90% 1.09% 9.90% 2.16%

Please remember past performance is not a guide to future returns. Where no data is shown, figures are not available. This information is provided to help you choose your own investments, remember they can fall as well as rise in value so you may not get back the original amount invested.

Fund Management Group Comment

Morgan Stanley was established in 1935 and has grown to become one of the world's leading financial services companies, with market leading positions in the US, Europe, Asia and emerging markets. The company operates under three principal divisions: Wealth Management, Investment Management and Investment Banking.

Morgan Stanley Investment Management (MSIM) was established in 1975 and is the asset management division of Morgan Stanley. Headquartered in New York City, but with portfolio management teams based across the world, MSIM offers investment expertise and products across a broad spectrum of global equities, fixed income, liquidity, alternatives and private markets.

Information about the fund

Fund manager biography

Manager Name: Dipen Patel
Manager start date: 1 June 2008
Manager located in: TBC

Dipen is a portfolio manager for the Global Fixed Income team. He joined Morgan Stanley in 2009 and has five years of investment experience. During his time at the firm he has worked in the Financial Control Group, before joining Morgan Stanley Investment Management in 2014. Dipen received a B.Sc. (Hons) in investment and financial risk management from the Cass Business School and is a qualified Chartered Management Accountant.

manager photo
Manager Name: Richard Ford
Manager start date: 1 December 2005
Manager located in: London

Ric is global head of Credit on the Global Fixed Income team. He joined Morgan Stanley in 1991 and has 28 years of investment experience. During his time at the firm he has worked as a risk manager and as a proprietary trader before joining MSIM in 2002. In addition to his experiences at Morgan Stanley, Ric was a chartered accountant with Ernst and Young and a portfolio manager with Pimco. Ric received a B.Com. in business studies from Edinburgh University and is a qualified Chartered Accountant.

Data policy - All information should be used for indicative purposes only. You should independently check data before making any investment decision. HL cannot guarantee that the data is accurate or complete, and accepts no responsibility for how it may be used. Benchmark data provided subject to this disclaimer.
You can buy or sell holdings in this fund through a Stocks and Shares ISA, Lifetime ISA, SIPP or Fund and Share Account