City Financial fund manager Mark Harris has realigned his portfolio to distance himself from sovereign fixed income markets and investment grade corporate bonds.
Harris highlights the “huge bull market” in bonds as being a factor in the lack of yield in some parts of the space.
He says: “A lot of bond markets, with inflation averaging two-three per cent, are not giving any real return – with the potential that if interest rates normalise at all then you could lose significant amounts of money.”
Harris has stripped his portfolio of sovereign or corporate fixed interest exposure and refocused his efforts.
Harris says: “We have continued to emphasise asset-backed securities in Europe, which offer compelling value and better yields. They are often overlooked and banks continue to divest in an effort to clean up their balance sheets.”
The multi-manager has added exposure within his range to the Brevin Howard Credit Catalyst fund due to its “well diversified list of names” and emphasis on asset-backed securities.
Chase de Vere head of communications Patrick Connolly says: “It has become very difficult to achieve a decent level of income without too much risk.”