Vanguard's Sarang Kulkarni takes 'controlled risks' in cyclical sectors

Focus on high quality companies

Profiting from having bought high-quality names in the fixed income market at "extremely attractive premiums" during the height of the coronavirus market sell-off allowed the Vanguard Global Credit Bond fund to take "controlled" bets in higher-risk, cyclical sectors as the market rebound commenced.

Manager Sarang Kulkarni said he had been "just as confused and concerned as anybody else" in March, as markets indiscriminately punished both stocks and bonds. However, he reasoned, "when we saw some of the higher-quality companies trading at such high premiums, that was a no brainer for us". "We were buying A-rated companies… where normally you do not get much of a premium but because of what had happened with the liquidity crunch in the market, these bonds were trading at extremely attractive premiums," he explained. Those bonds included names in the tech space, as well as produc...