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BDO stays flexible with Fitzwilliam fund duo

BDO Stoy Hayward Investment Management says flexibility has helped the per-formance of its Fitzwilliam strategic bond and balanced income funds of funds during their first year.

The strategic bond fund returned 1.7 per cent compared with the UK other bond sector average of -2 per cent.

The company says its ability to asset allocate among different areas of the bond market gives it greater flexibility to find opportunities in difficult market conditions, with positive contribu-tions coming recently from emerging markets, global bonds and convertibles.

The fund’s Nurs structure, which allows fund manager Kristian Cassar to invest up to 20 per cent in unregulated markets, has also added to the fund’s flexibility. This structure allows Cassar to access loan funds, which are attractive as they are secured investments.

The balanced income fund was established as an alternative to equity income funds but sits in the balanced managed sector because this allows it to diversify up to 20 per cent outside the UK to reduce volatility. The fund returned 1.01 per cent in its first year, underperforming its sector average but performing well against the UK equity income sector that it is meant to outperform.

Fund manager Stuart Clark says it has been a tough year but diversified holdings in Japan, the UK and alternative investments such as the Morgan Stanley FX alpha plus fund have helped performance relative to the UK equity income sector.

Clark says: “The Morgan Stanley fund is a quantitative fund that trades foreign currency pairs. It gives us equity-like volatility with cash-plus returns. Currencies are very uncorrelated to equities and we get consistent returns from this fund.

“In the equities space, we are not buying yet as we think there is more potential bad news. We have a high cash pos-ition of about 8 per cent, so we will be ready to buy when opportunities are there.”

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