Marc Rovers has achieved the unique feat of gaining the top spot for the third consecutive year in our Euro Stars rankings. No manager has previously demonstrated such a consistent run of form, with London-based Rovers, who is head of European credit at LGIM, maintaining strong risk-adjusted performance across a range of bond strategies.

Speaking in 2021, Rovers pinned his achievement on agility and consistency, and it appears to be more of the same for this year’s showing. Talking to Citywire Selector, Rovers said his combination of top-down and bottom-up analysis has been matched with a keen eye on how the tapestry of fundamentals, valuations and trends weave together.

‘We look to anchor views and positions in themes that we develop in conjunction with our colleagues including economists, credit analysts and investment stewardship, and that we believe are longer-term drivers for performance in markets and sectors. This way we aim to identify diversified sources of alpha that could help us generate consistent returns in different market conditions,’ he said.

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CAUTION FUELS RETURNS

So, what has actually driven his returns? Looking back over the past three years, Rovers said a move onto a more cautious footing before the pandemic helped guard against the worst that was to come.

‘One of the calls that worked best was our defensive positioning in utilities and German government bonds at the start of 2020. We felt the economic outlook became more challenging and the spread differential between high and low quality credit had become too compressed.

‘When spreads widened massively during the March selloff and attractively priced new issues from quality issuers came to the market in April and May we used this opportunity to selectively add risk to our portfolios. By doing so we not only outperformed during the market turmoil in the first quarter of 2020 but also during the recovery in the subsequent periods.’

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CHALLENGES AHEAD

Rovers is at the vanguard of a number of corporate bond managers who have cracked the top 10 for the class of 2022. Along with other leading names in fixed income profiled this year, one of his key concerns is the changing macro landscape and what that means for bond buyers.

Rovers said: ‘The main challenge will be to navigate challenging economic conditions and seek to protect our client’s capital in an environment where central banks are reducing support and companies have to manage multiple headwinds.

‘Spreads for investment grade euro credit currently are at the higher end of the historic range so you are getting well rewarded for the risk, especially as the investment grade credit universe consists of the larger more diversified banks and companies.’

Rovers, who focuses on the European market, is looking keenly at how the European Central Bank will seek to wind down its accommodative measures.

Here he believes the truly active managers stand to benefit, as they will be the ones doing the adequate credit work to identify the stronger names from those that could come under pressure as the scenario changes.

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ROVERS IS CLEARLY AHEAD OF HIS AVERAGE RIVALS OVER THREE YEARS