Jupiter strategic bond fund manager Ariel Bezalel has nearly doubled his exposure to banks in the last few months.
Bezalel now has 14 per cent of the £607.5m Jupiter strategic bond fund invested in banks, up from 8 per cent in September, and says UK and US banks are offering the best opportunities.
He says: “We think the US is far ahead of the curve in recapitalising the banking system than Europe.”
Bezalel now has 2 per cent of the fund in Royal Bank of Scotland subordinated debt, 2.5 per cent in Lloyds convertibles and just over 1 per cent in senior secured debt in Citigroup.
He says: “The tier-two notes in RBS are yielding around 11 per cent, which is very attractive. The bank has done well in shrinking its balance sheet. Funding for 2012 has almost been sorted out. Similarly, we are getting equity-like returns from the Lloyds convertibles. Lloyds equities and bonds have been battered unfairly because of managemen turmoil and that turmoil seems to have settled down.”