Artemis Corporate Bond: May 2026 fund update

• Stephen Snowden is a seasoned corporate bond investor with over 20 years' experience

• We like the manager's clear, disciplined investment process, which we think could drive returns over the long term

• Snowden has delivered strong returns for investors over the long term, outperforming the corporate bond peer group

• This fund features on our Wealth Shortlist of funds chosen by our analysts for their long-term performance potential

How it fits into a portfolio

Artemis Corporate Bond aims to provide investors with both income and growth over the long term by mainly investing in investment grade bonds. These are bonds with higher credit ratings which are considered lower risk compared with bonds that have a greater chance of default. This fund could therefore form part of a diversified bond portfolio or diversify an equity-focused portfolio.

That said, the more concentrated approach and some investments in high-yield bonds means that the fund could be more volatile than peers.

Manager

Stephen Snowden has managed the fund since it launched in October 2019 when he joined Artemis. He's a seasoned corporate bond investor with over 20 years' experience, previously managing similar funds at Old Mutual and Kames. This means that Snowden has navigated the corporate bond market through a range of economic conditions. We believe that making use of this experience leaves him well positioned to continue his success at Artemis, and our conviction lies with him. Snowden became Head of Fixed Income at Artemis in 2021.

Snowden has the support of co-manager Grace Le, who came to Artemis in December 2019 from Kames, where she co-managed some bond funds. Le has been managing bond funds since the end of 2018, having started her career in 2012 at PWC, where she qualified as a chartered accountant.

Process

The fund's investment process blends 'top down' macro-economic research with 'bottom up' fundamental analysis of individual companies' bonds. The macro analysis involves building up a picture of where countries are in the economic cycle as well as considering factors such as inflation and interest rates.

This is combined with 'bottom up' analysis of bond-issuing companies to find what they believe to be the most compelling opportunities. Snowden and Le also meet company management to assess both their quality and their strategy for the business, so they can ensure that what they're trying to achieve isn't likely to disadvantage bondholders.

At least 80% of the fund invests in investment-grade bonds (those with a credit rating of BBB or above) that are issued in sterling or hedged back to sterling from other currencies, like the Euro or the Dollar. The fund also has the flexibility to invest in derivatives and high-yield bonds, which adds risk – some of these may be less ‘liquid’, which could make them more difficult to sell.

Snowden and Le currently invest in 103 bonds, though most funds in the IA £ Corporate Bond sector tend to invest in more bonds. This means that each one can have a bigger impact on returns.

The managers are often active in changing the bonds in the fund. They recently bought bonds issued by Picorp and Standard Life after their prices fell and became more attractive. They also reduced investments in bonds issued by insurers, including Rothesay, New York Life and Legal and General. Investments in bonds issued by banks have been reduced, too, as they sold bonds issued by Wells Fargo, Goldman Sachs, Morgan Stanley and Deutsche Bank, because of their exposure to private credit.

Although some bank bonds were sold, the fund’s largest sector exposures are to banks, utilities and consumer services. The fund’s duration is similar to the benchmark at the end of March 2026 at 6 years. Duration is a measure of the sensitivity of a bond‘s price to a change in interest rates and is measured in years. In general, the higher the level of duration, the more sensitive the fund is to interest rate changes.

Culture

Snowden is a partner at Artemis, and Artemis is a private company. We think that this structure is a good thing for investors, as both manager and firm are focused on the long term and can run funds without the distraction of short-term shareholder demands. Fund managers at Artemis are required to invest their own money in their funds, which means that they succeed when their investors do. Artemis also provides an attractive environment for fund managers, allowing them the freedom to run money how they see fit without imposing a 'house view' on them.

ESG integration

The managers believe that environmental, social and governance (ESG) considerations have become issues that investors and companies can't ignore and that in the future, companies that encounter issues and perform poorly in these areas are likely to be viewed negatively by more investors. That said, this is not an ESG-labelled fund and the managers’ focus is on finding the best bonds to invest in.

Investment teams at Artemis are encouraged to think for themselves and invest according to their own style, so the quality of ESG integration across the firm varies. Artemis has a firm-wide policy to support the aims of international conventions on cluster munitions and anti-personnel mines, and, therefore, the firm will not knowingly invest in companies that produce these weapons.

Artemis votes on all their holdings, unless restricted from doing so, and fund managers engage with firms to develop their understanding, raise issues with management and monitor subsequent developments. The firm provides engagement case studies and other information about its engagement and voting efforts, in an annual Stewardship report. Artemis produces a monthly voting summary, and these summaries include rationales for some of the more controversial votes. Engagement case studies can be found in the firm’s annual Stewardship Report.

Cost

The fund has an annual ongoing charge of 0.35%, but through Hargreaves Lansdown you can secure an ongoing saving of 0.05%. This means that you’ll pay a net ongoing charge of 0.30%. The fund discount is achieved through a loyalty bonus, which could be subject to tax if held outside of an ISA or SIPP.

Our platform charge of up to 0.35% per year also applies, except in the HL Junior ISA, where no platform charge applies.

We recently made some changes to the amount clients pay to invest with us. Find out more about these changes

Please note that the fund takes charges from capital, which could boost the income paid but reduce the potential for capital growth.

Performance

Snowden has delivered strong performance over the long term, outperforming the corporate bond peer group average. Like all fund managers, though, he's had weaker periods, too. He endured a tough time during the financial crisis, for instance, but bounced back reasonably well. Please remember that past performance is not a guide to future returns.

Since moving from Kames to Artemis in October 2019, Snowden has performed strongly. In the initial months when the coronavirus hit, investments in higher quality bonds and selling bonds issued by companies more exposed to the effects of Covid-19 helped performance. Snowden also invested in bonds at lower prices which went on to perform well. This led to the fund's outperforming the IA £ Corporate Bond peer group significantly in 2020, returning 14.49% versus 7.75%. Although the level of outperformance is a positive for investors, it’s greater than we normally expect.

Over the last 12 months, the fund has delivered a return of 3.93%*, rising by more than the IA £ Corporate Bond peer group average, which returned 3.40%. The modest outperformance reflects lots of small gains, including trading between different bonds from companies in the same sector.

Snowden is a seasoned corporate bond investor with over two decades of experience. His performance navigating bond markets over this time is the reason for our conviction.

At the end of April, the fund offered a distribution yield of 5.21%, although yields are variable and aren’t a reliable indicator of future income.