Wealth Shortlist update: Artemis High Income

In September 2021, Artemis announced that Alex Ralph would step down as lead manager of the Artemis High Income fund and leave the business.

David Ennett became the new lead manager, supported by co-manager Jack Holmes. The duo manage the bonds portion, which makes up most of the fund. Ed Legget, responsible for the company shares in the fund, remained in his position.

We wrote to clients at the time to inform them of the changes. We had met David Ennett and rated his track record and experience, so the fund remained on the Wealth Shortlist of funds chosen by our analysts for their long-term potential. That said, we wanted to carry out further analysis to assess our conviction in the fund and its ongoing place on the Wealth Shortlist. We have since held meetings with Ennett, Holmes and Legget and carried out further analysis on their track records.

The fund’s objective is unchanged. It continues to focus on paying a high income to investors, mainly by investing in bonds. There will be no change of philosophy here from the managers either, they will continue to place a high priority on generating an income for investors. Up to 20% of the fund can invest in UK and European shares, with the aim of boosting income and capital growth. The fund takes charges from capital, which can increase the yield but reduce the potential for capital growth.

Since taking over the fund the managers have made some changes to the fund’s investments including reducing exposure to European high yield bonds in favour of adding more US high-yield bonds. The managers think there’s a wider opportunity set to exploit in this larger market and continue to hedge these bonds back into Sterling.

Our view

We have spoken with the fixed income team at Artemis several times since the fund manager changes. We now have an even deeper understanding of Ennett and Holmes’ investment style. We’ve also discussed other changes to the fund, and the support and challenge they receive from the rest of the fixed income team.

We think Ennett is a talented high yield bond fund manager. We view this as relevant experience as the Artemis High Income fund has a bias to higher-risk high yield bonds in order to meet its income objectives. This includes his time managing high yield bond funds that produce an income at ASI and Aegon (previously Kames Capital), where he was Head of High Yield. He has built a good track record since 2012, which includes a global high yield bond fund that he’s managed since joining Artemis in 2019. Remember past performance is not a guide to the future.

We are pleased to see an element of continuity with Ed Legget remaining in place and also have a positive view of the fixed income team at Artemis. Led by Stephen Snowden, they have an experienced team that we rate highly.

For these reasons, we have conviction in David Ennett as lead manager of the fund and retain Artemis High Income on the Wealth Shortlist.

We’ll be speaking to the managers again over the coming months and providing a full research update to clients in April. This isn’t a recommendation to make any changes to a portfolio. Investors should make sure any investments match their investment goals and attitude to risk. If you're not sure if an investment is suitable for your circumstances, please seek advice.

Past performance is not a guide to the future. Source: Lipper IM to 31/12/2021. Figures include income being reinvested.

Find out more about the Artemis High Income fund including charges

Artemis High Income Key Investor Information