e-fundresearch: Mr Rosenkilde, you are the fund manager DWS Invest Euro Corporate Bonds (ISIN: LU0300357802). Since when are your responsible for the fund management?
e-fundresearch: Which benchmark do you adhere to?
Rosenkilde: Iboxx € Corporate All.
e-fundresearch: Are you also responsible for other funds at the moment?
Rosenkilde: DWS Invest Short Duration Credit.
e-fundresearch: What is the total volume that you manage in all your funds?
Rosenkilde: € 250mio.
e-fundresearch: Regarding the performance: which performance did you achieve since the beginning of the year and in the years 2007-2011? Absolutely and relatively to the relevant benchmark?
e-fundresearch: How content are you with your own performance in the last years and this year?
Rosenkilde: Quite pleased with our performance in 2011 where we ended in the top quartile by both Lipper and Morningstar. We recognised fairly early that the sovereign debt crises in the Eurozone would have a profound and negative effect especially for financials and peripheral issuers and went underweight the sector and the regions.
In 2012, although we started the year with the abovementioned underweights and a defensive portfolio, we turned the positioning around quickly and went overweight financials as well as peripheral credits. Towards the end of March we reversed the positions and have now again a large overweight outside the € zone but as a result of the LTRO only a small underweight in financials, which have resulted in a particular good April.
e-fundresearch: How are you able to deliver added value for your investors with your performance?
Rosenkilde: The global set up that we enjoy at Deutsche Bank’s asset management operation is a big advantage for a corporate bond manager. For instance, having Australian banks covered by analysts in Melbourne or an American company covered out of New York provides us with an inside that would otherwise not have been achieved. We have in the past been very efficient in detecting opportunities and threats through our research set up.
Aside from or large research network on the corporate side, I benefit from receiving inputs and information from as diverse sources as our emerging markets team, sovereign specialist and out equity side. I believe that our size and diversity regionally, as well as in different asset classes, and the candid systems which help us filter the information and inputs are a substantial advantage.
e-fundresearch: How long have you been a fund manager already?
Rosenkilde: I have been trading credit and corporate bonds since 1996 and I have worked for DWS since 2008.
e-fundresearch: What were your biggest successes and your biggest disappointments in your career as fund manager?
Rosenkilde: There have been countless of both during my tenure in the corporate bond market.
But in recent years I would say the quick and decisive repositioning of the bonds in DWS Invest Euro Corporate bonds in late spring 2011 and again twice in early January 2012 and late March 2012 counts as a success. In 2011, as mentioned above, we decided to go underweight financials and peripherals and moved away from the € zone. In the first week of this year we recognised the positive effect of the ECBs LTRO bank funding auctions and the increased determination from Brussels. And in March of this year when faced with a change in market sentiment as a result of the renewed sovereign debt fear stemming predominantly from Spain, we reacted rather quickly, given the state of the market and returned to a large non Eurozone overweight.
I am particularly disappointed by the events of May and June 2010 when the Euro sovereign crises really took hold of the market and the lack of actions and misguided statements from the European politicians made risk aversion return to our market making it increasingly difficult to trade as liquidity dried out. Back then we were not fast enough to react to the relatively new phenomena of sovereign risk, but I feel that we learned a valuable lesson.
e-fundresearch: What kind of capital market situation do we have at the moment? How do you act in this environment?
Rosenkilde: The current market situation is tricky to say the least, the corporate bond market has reversed its tightening trend because of several factors: The Spanish budget deficit, the French election, uncertainty in Holland after the government collapse, the Greek election, the Irish referendum, enormous volatility in equities, signs of slowing growth in America and possibilities of a worsening of the European recession which might lead to a worsening of the sovereign debt crises and an escalation of the stress in the financial system. All these factors weigh on the heavily on the market, but most of them have been known for while and should be partially priced in. On the other hand the Q1 earning season is off to a flying start, 80% of the companies that have reported so far have delivered a beat and have generally been supportive for bonds. The record low interest rate is also a helping factor as credits tend to perform in such an environment. Furthermore the LTROs have gone a long way to alleviate the funding pressure for the banks, and most importantly corporate bonds have seen tremendous inflows into the asset class which will continue to support our market.
e-fundresearch: What are the special challenges in this environment?
Rosenkilde: In environment as the one described above you have to some hold risk and not be too defensive. It is nonetheless very important to be invested in regions where you see growth or potential or potential for growth, this would in our case mean emerging markets and North America. We have a sizable underweight in the € zone, but do see value in some of the better corporates in the region and in some of the best capitalized banks in the periphery, but prefer to hold short dated paper in the banks. With regards to banks we see further upside in the UK names and the US money centre banks. We still hold a considerable amount of cash, which we plan to invest if we see further weakness.
e-fundresearch: What objectives do you have till the end of the year and in the midterm for the upcoming 3 to 5 years?
Rosenkilde: It may not sound ingenious but I would aim to continue to outperform the benchmark and my peers, and in doing so, provide our investors with a stable and healthy return.
e-fundresearch: Do you model yourself on someone? Any ideals?
Rosenkilde: I believe that a person should have many heroes and role models.
e-fundresearch: What motivates you in your job?
Rosenkilde: It is a challenging and ever changing job where there is very little routine. You are required to use your deductive skills to produce the right result in numerous situations and events.
Furthermore, I like the fact that it brings you into contact with a wide variety of people from many different cultures.
e-fundresearch: What else do you want to achieve or do you have any further aims as a fund manager?
Rosenkilde: I obviously have several dreams which I want to realize, but these are of a personal nature.
e-fundresearch: What other profession would you have taken interest in, apart from becoming a fund manager?
Rosenkilde: When I was younger I wanted to become a journalist and went to university to study politics. But as fate would have it I ended up in fund management, no regrets though.
e-fundresearch: Thank you for the interview!