View more on these topics

Fidelity income favours high yield

The Fidelity multi-manager income fund is investing in areas of the bond market that are less sensitive to interest rates due to concerns that rates will rise to curb inflation.

Fund manager Eugene Philalithis is taking an overweight position in corporate bonds but reducing exposure to investment-grade bonds in favour of high yield.
High yield bonds tend to be less sensitive to interest rate changes than government and investment-grade corporate bonds because their prices are more a reflection of the credit quality of the issuers.

Philalithis also has some government bond exposure in the portfolio to hedge against the risk of widening credit spreads, where corporate bond yields move further away from government bond yields to compensate investors for taking on higher risk.

Philalithis is playing the theme of getting an extra return relative to government bonds with low sensitivity to interest rates through listed closed-ended funds.

He holds the London-listed Brevan Howard credit catalysts fund, a feeder fund that invests in corporate and asset-backed credit markets through the Brevan Howard credit catalysts master fund.

Philalithis is also looking at a listed fund, which he is currently unable to disclose, that invests in less liquid parts of the corporate bond market.

Philalithis says: “There is a lot of concern about inflation and interest rate hikes. I am trying to keep sensitivity to interest rates low but am favouring high-yield corporate bonds and reducing investment-grade exposure. I am also looking at listed vehicles to give us the risk premium without any interest-rate risk.”

Recommended

5

A compensation premium for everyone is the fairest way

The cost of regulation has weighed heavily on the financial services industry for over two decades and the time has come to make transparent that part of the cost which must ultimately be borne by the consumer. With the proposed move to a transparent adviser-charging structure, advisers are becoming more focused on the various cost […]

Ian Thomas latest to leave Axa Wealth

Axa Wealth head of customer experience Ian Thomas is leaving Axa alongside around 20 staff who have had their roles made redundant as part of a company restructure. The restructure, announced yesterday, saw Axa Elevate managing director Martin Jennings step down from his role. Axa says around 20 roles have been affected by the restructure […]

1

Resolution says no need for further acquisitions

Resolution says it does not need further acquisitions as part of its UK life consolidation project. In a market update published this morning, Resolution says the returns it has been targeting can be achieved without needing to acquire more businesses. The statement says: “Resolution is confident that it will achieve its targeted mid-teen returns on […]

2

First wave of ex-Clarkson Hill advisers gain investment permissions

The initial groups of former Clarkson Hill advisers to join Merchant House Financial Services and Moneygate have been granted full investment permissions from the FSA. National IFA Clarkson Hill went into administration in December after protracted talks with the FSA about whether the firm was meeting regulatory capital requirements. Merchant House acquired some of Clarkson […]

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