View more on these topics

Adviser Fund Index

Strategic bond products were popular among Adviser Fund Index panellists during the May rebalancing.

Investor demand for flexible fixed-income mandates has strengthened in recent years and the trend was particularly noticeable in the Cautious benchmark.

Artemis strategic bond was selected for the first time by two advisers while M&G optimal income and L&G dynamic bond dominate the index weightings.

The popularity of such funds led the Investment Management Association to create a sterling strategic bond peer group in September 2008 and sustained demand has since seen it almost double in size to over £20bn.

The trend shows no signs of slowing, with the sector topping the net retail sales charts in the first four months of the year and taking £465m in April alone - the highest monthly figure since March 2010.

Charles Stanley collectives fund manager Shauna Bevan says strategic products form over 50 per cent of her firm’s fixed-income exposure.

She says: “We have increased our allocation to strategic bond funds this year, partly as a result of the interest rate environment. We also felt that there had been quite a lot of spread compression, so the valuation anomaly with investment-grade corporates had narrowed to some degree.

“So we took the decision to lock in that profit and then outsource the credit and duration decisions to a strategic bond fund manager.

“While it does not look like interest rates are going to rise any time soon, it is hard to call. Therefore, outsourcing some of those decisions to an experienced bond fund manager who has the flexibility to move up and down the credit spectrum, and to go short duration, is appealing.”

Budge director Chris Wise takes a similar line. Three years ago, Budge switched out of property into corporate bond and strategic bond mandates.

Wise says: “People recognise that rates are going to go up but at what point do you start to move tactically out of traditional corporate bond funds into other bond spaces?

“We came to the conclusion that we are better off delegating that decision to a strategic bond manager who has got that flexible remit rather than trying to do it ourselves.”

Both Bevan and Wise hold M&G optimal income and L&G dynamic bond within their AFI selections while Wise also uses Henderson preference & bond – a new addition to the AFI in May.

Bevan says she favours the M&G and L&G products because of the long track records of their managers, Richard Woolnough and Richard Hodges respectively, and the research capabilities of their employers.

She says the portfolios have different investment styles, with Hodges engaging in more “opportunistic” trading on the £1.6bn L&G fund.


Bank to keep 60% stake in St James’s Place

Lloyds Banking Group has confirmed it will keep its 60 per cent stake in St James’s Place. Last week, Lloyds said the bank intends to retain the multi-tied advice firm after months of speculation that it may be sold off. In May, SJP revealed a £1bn rise in assets under management in the first quarter […]

SFO launches probe into ETFs

The Serious Fraud Office has launched a review into how exchange-traded funds are marketed and whether it has the capability to prosecute any wrongdoing in the industry. It has been consulting with bankers and lawyers to see if there is in risk of criminal conduct in the sales process of these funds. The review comes […]


Aegon blundered on minimum pension age

Aegon has apologised after it sent a pre-retirement letter to a client saying he could take pension benefits at 50. Former IFA John Ball received a letter from Aegon on June 16 which included information on taking benefits from his group personal pension at his selected retirement date of October 28, 2011, when he turns […]

The FCA’s five fixes for retirement information

The Financial Conduct Authority (FCA) has started to change the way that people will be told about their pension options. In a recent market study paper, they lay out their final proposals on the information that should be delivered to people approaching retirement and how it should look and feel. During 2015, there will be […]


News and expert analysis straight to your inbox

Sign up


    Leave a comment


    Why register with Money Marketing ?

    Providing trusted insight for professional advisers.  Since 1985 Money Marketing has helped promote and analyse the financial adviser community in the UK and continues to be the trusted industry brand for independent insight and advice.

    News & analysis delivered directly to your inbox
    Register today to receive our range of news alerts including daily and weekly briefings

    Money Marketing Events
    Be the first to hear about our industry leading conferences, awards, roundtables and more.

    Research and insight
    Take part in and see the results of Money Marketing's flagship investigations into industry trends.

    Have your say
    Only registered users can post comments. As the voice of the adviser community, our content generates robust debate. Sign up today and make your voice heard.

    Register now

    Having problems?

    Contact us on +44 (0)20 7292 3712

    Lines are open Monday to Friday 9:00am -5.00pm