View more on these topics

Barings and Cazenove question corporate bond fund liquidity

Barings and Cazenove agree with the FSA that corporate bond fund liquidity is an issue that needs addressing

Barings Asset Management and Cazenove Capital agree corporate bond fund liquidity is an issue that needs to be looked at after the FSA raised concerns about managers’ ability to cope with large-scale redemptions.

The regulator recently sent a letter to corporate bond fund managers asking what risk controls and monitors they have in place to manage large-scale redemptions in the face of low market liquidity.

Barings fund manager Andrew Cole, who runs the £339.3m Baring Multi-Asset fund, has around 7 per cent of the fund in corporate bonds. This is divided between three managers but he says he could increase this to four or five managers to dilute the holdings of each bond.

Cole says: “We have not increased our exposure to corporate bonds because of concerns about liquidity. Banks have been issuing a lot of paper to recapitalise themselves so we are making sure we are not over-exposed. If lots of people try to exit it could take a while to get out and prices could fall a long way.”

Cazenove head of multi-manager Marcus Brookes says the FSA is right to look at corporate bond liquidity, but investors should not avoid corporate bonds altogether. He says: “Our approach is to have multiple holdings in corporate bond funds.”

Brooks Macdonald head of investment strategy Gemma Godfrey says capping exposure to each bond fund is a good idea. She adds: “Another way to mitigate risk is to monitor the fund’s cash positions on a monthly basis.”

Recommended

SJP firm leaves and joins Succession as N Ireland hub

Adviser firm CBS Astor Buller has left St James’s Place and joined Succession Advisory Services. Succession says Belfast-based CBS will become its hub in Northern Ireland. The firm currently has around £120m of assets under advice. Succession chief executive Simon Chamberlain (pictured) says: “Our established framework and continued investment in training and development enables a […]

Govt may force disclosure of clients using avoidance products

The Government has proposed toughening up the oversight of financial products used to reduce tax liabilities and schemes used to reduce employment taxes, including forcing advisers to disclose any clients using them. Under the proposals, published this week, stronger client list reporting standards, including disclosure of end users, could be mandated or HM Revenue & […]

Derek Stuart: where to find value in the UK?

Derek discusses a number of Œself-help stories as examples of where he is finding good opportunities in the UK With the FTSE trading at historically high levels, many investors have questioned whether UK equities continue to offer value. But, as Derek points out, the headline figures mask many opportunities at a sector level. He has […]

Newsletter

News and expert analysis straight to your inbox

Sign up

Comments

    Leave a comment

    Close

    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

    Email: customerservices@moneymarketing.com