Artemis Corporate Bond Fund
Q1 2026 update
Source for all information: Artemis as at 30 March 2026, unless otherwise stated.
CAPITAL AT RISK. All financial investments involve taking risk and the value of your investment may go down as well as up. This means your investment is not guaranteed and you may not get back as much as you put in. Any income from the investment is also likely to vary and cannot be guaranteed.
This is a marketing communication. Before making any final investment decisions, and to understand the investment risks involved, refer to the fund prospectus (or in the case of investment trusts, Investor Disclosure Document and Articles of Association), available in English, and KIID/KID, available in English and in your local language depending on local country registration, available in the literature library.
Fund objective
To generate a return that exceeds the iBoxx £ Collateralized & Corporates index, after fees, over rolling three-year periods, through a combination of income and capital growth.
Review of the quarter to 31 March 2026
UK government bonds outperformed other markets in the first half of January but relinquished those relative gains over the next two weeks, before performing strongly again in February.
Meanwhile, the corporate bond market struggled to digest a large amount of debt issued by the AI ‘hyperscalers’ – Amazon, Alphabet, Meta, Microsoft and Oracle1. Investors also became concerned about artificial intelligence (AI) threatening a range of companies and industries2.
March brought no respite. The UK government bond market reacted violently to the war in Iran, with 10-year yields rising sharply and prices (which are inversely correlated) falling.
Performance
The fund ended February with a slightly shorter duration position than its first benchmark, the iBoxx £ Collateralized & Corporates index3. This meant it was less sensitive to changes in interest rates. Therefore, it was less vulnerable when conflict in the Middle East pushed up oil prices in March, putting an end to hopes that interest rates would be cut. Although the size of that position was relatively modest, it made a material contribution to returns because government bond yields rose so sharply (and prices fell).
The Artemis Corporate Bond Fund returned -1.9% during the quarter, modestly ahead of the iBoxx £ Collateralized & Corporate index (-2.0%). The IA £ Corporate Bond sector average4, the fund’s second benchmark, returned -1.6%.
Five-year discrete calendar-year performance
| 2025 | 2024 | 2023 | 2022 | 2021 | |
| Artemis Corporate Bond Fund | 7.5% | 3.1% | 10.3% | -15.6% | -0.7% |
| iBoxx £ Collateralized & Corporate index | 7.2% | 1.7% | 9.9% | -19.4% | -3.0% |
| IA £ Corporate Bond NR | 7.0% | 2.7% | 9.3% | -16.4% | -1.9% |
Past performance is not a guide to the future.
Source: Lipper Limited, to 31 December 2025, class I accumulation units in GBP. All figures show total returns with income reinvested, net of all charges. Performance does not take account of any costs incurred when investors buy or sell the fund. Returns may vary as a result of currency fluctuations if the investor's currency is different to that of the class. This class may have charges or a hedging approach different from those in the IA sector benchmark.
Activity
In January, we bought bonds issued by New York Life and Danske Bank. We also switched from Ford into Whitbread, from Eastern Power Networks into London Power and from Osprey into Anglian Water.
February was dominated by issuance from technology companies and the debate over AI-related disruption. We bought a new Oracle bond early in the month but sold it later at a small loss. We also bought a 100-year bond from Alphabet because we thought it was good value and we expected significant demand from passive investors (who seek to replicate, rather than beat their benchmarks). We sold it just before the month ended for a modest profit.
On the first day of March, as markets reacted to war breaking out in Iran, we took advantage of falling prices to buy Picorp bonds and top up Standard Life. We sold these positions quickly to take profits as the market recovered.
March was a busy month for us, during which we increased the quality of our portfolio, favoured more defensive areas and reduced risk. We cut our insurance exposure due to concerns over private credit (non-bank lending) by selling Rothesay and halving our position in New York Life. We also reduced Legal & General and switched some of the proceeds into Zurich. In addition, we exited Wells Fargo, Goldman Sachs, Morgan Stanley and Deutsche Bank.
We moved away from areas vulnerable to an energy shock, selling debt issued by Gatwick Airport and Ford. Concurrently, we bought Shell and TotalEnergies, as well as Haleon and Reckitt.
Having sold more corporate bonds than we bought, we parked some of the cash in five-year gilts (UK government bonds), taking the fund's exposure up to around 3%.
There was only one new issue in March, from Danone. We thought it was good value so we put in a large order, got a decent allocation, bought more in the secondary market and the bond performed well. It is now our sixth-largest holding.
Outlook
UK government bonds – especially two- and five-year gilts – appear to be cheap. We also think the market’s interest rate expectations are too pessimistic. The brave thing to do would to be to take a long-duration position by buying gilts that are more sensitive to interest rates. Yet that move could potentially prove painful this year. Given how impossible it is to predict the outcome of the Middle East crisis, we do not think this is an optimal time to be brave.
On the corporate bond side, we have become concerned about three things: exposure to private credit, particularly among insurers; AI disrupting companies’ business models; and the scale of bond issuance by technology companies. Each of these may be manageable in isolation, but not necessarily together. In this context, we think a defensive stance is prudent.
Notes and references
3. The iBoxx £ Collateralized & Corporates index is a widely used indicator of the performance of sterling-denominated corporate investment grade bonds, in which the fund invests. It acts as a ‘target benchmark’ that the fund aims to outperform. Management of the fund is not restricted by this benchmark.
4. IA £ Corporate Bond sector is a group of asset managers’ funds that invest in similar asset types to the fund, collated by the Investment Association. It acts as a ‘comparator benchmark’ against which the fund’s performance can be compared. Management of the fund is not restricted by this benchmark.
Risks specific to Artemis Corporate Bond Fund
- Market volatility risk The value of the fund and any income from it can fall or rise because of movements in stockmarkets, currencies and interest rates, each of which can move irrationally and be affected unpredictably by diverse factors, including political and economic events.
- Currency risk The fund’s assets may be priced in currencies other than the fund base currency. Changes in currency exchange rates can therefore affect the fund's value.
- Bond liquidity risk The fund holds bonds which could prove difficult to sell. As a result, the fund may have to lower the selling price, sell other investments or forego more appealing investment opportunities.
- Credit risk Investments in bonds are affected by interest rates, inflation and credit ratings. It is possible that bond issuers will not pay interest or return the capital. All of these events can reduce the value of bonds held by the fund.
- Derivatives risk The fund may invest in derivatives with the aim of profiting from falling (‘shorting’) as well as rising prices. Should the asset’s value vary in an unexpected way, the fund value could reduce.
- Charges from capital risk Where charges are taken wholly or partly out of a fund's capital, distributable income may be increased at the expense of capital, which may constrain or erode capital growth.
- Emerging markets risk Compared to more established economies, investments in emerging markets may be subject to greater volatility due to differences in generally accepted accounting principles, less governed standards or from economic or political instability. Under certain market conditions assets may be difficult to sell.
- Income risk The payment of income and its level is not guaranteed.
Important information
The intention of Artemis’ ‘investment insights’ articles is to present objective news, information, data and guidance on finance topics drawn from a diverse collection of sources. Content is not intended to provide tax, legal, insurance or investment advice and should not be construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any security or investment by Artemis or any third-party. Potential investors should consider the need for independent financial advice. Any research or analysis has been procured by Artemis for its own use and may be acted on in that connection. The contents of articles are based on sources of information believed to be reliable; however, save to the extent required by applicable law or regulations, no guarantee, warranty or representation is given as to its accuracy or completeness. Any forward-looking statements are based on Artemis’ current opinions, expectations and projections. Articles are provided to you only incidentally, and any opinions expressed are subject to change without notice. The source for all data is Artemis, unless stated otherwise. The value of an investment, and any income from it, can fall as well as rise as a result of market and currency fluctuations and you may not get back the amount originally invested.
