Nationwide Strategic Income Fund Surpasses Bond Index in Q2 2025

The Nationwide Strategic Income Fund’s IS share class achieved a notable performance in the second quarter of 2025, surpassing the benchmark Bloomberg US Aggregate Bond Index by a margin of 1.61% compared to the index’s 1.21%. This positive outcome was largely driven by the Fund’s holdings in investment grade corporate bonds and high-yield corporate bonds, which were the primary contributors to its quarterly success.

Market Dynamics and Challenges

During this quarter, financial markets faced considerable volatility, particularly following the announcement of “Liberation Day” tariffs on April 2, 2025. These tariffs were significantly higher than market participants had anticipated, leading to a shift in investor sentiment. Many began to factor in an increased risk of a US recession, which resulted in lower bond yields across the board.

Despite the Fund’s overall positive performance, certain factors negatively impacted results. The corporate credit hedges and interest rate hedges implemented by the Fund emerged as the largest detractors from performance during this period. These hedges, intended to mitigate risks, did not perform as expected, highlighting the complexities of navigating a volatile market.

Investors closely monitoring the Fund have expressed a mix of optimism and caution. The strong showing against the Bloomberg US Aggregate Bond Index reinforces the Fund’s strategic approach to bond selection, particularly in the corporate sector. As the economic landscape continues to evolve, the Fund’s management will need to remain vigilant in assessing market conditions and adjusting strategies accordingly.

The Nationwide Strategic Income Fund’s ability to outperform its benchmark amid heightened market uncertainty underscores the importance of a well-structured investment strategy. Looking ahead, stakeholders will be keen to see how the Fund adapts to ongoing changes within the financial environment, especially in light of potential shifts in interest rates and corporate credit performance.