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How OPM fixed income aims to beat a rate rise

OPM believes the nimbleness of its £41m fixed-income fund, its strategic investment mandate and its fund of funds structure gives it an edge when faced with the prospect of rising UK interest rates.

OPM sees higher rates as inevitable and says investors will need to be invested across credit markets to reduce the impact rising yields will have on their capital. It says the fund has delivered above-average yield with less volatility, partly because it can move quickly among different areas of the bond market as market conditions change.

Financial Express data shows the fund produced returns of 11.41, 27.35 and 22.65 per cent over the last one, three and five years to June 1, with volatility of 3.29, 9.8 and 8.25 per cent respectively. The IMA sterling strategic bond sector average produced returns of 8.36, 20.91 and 19.2 per cent over the same periods, with volatility of 4.88, 10.35 and 8.59 per cent respectively.

OPM says it favoured high yield because it outperformed investment-grade bonds over the last 18 months but the firm has recently been taking money out of the sector because volatility tends to hit high yield rather than investment-grade bonds.

When volatility spikes up, OPM tends to invest in reverse convertibles, which are typically based round a well traded company and behave like equities as markets rise while acting like bonds when markets fall.

Fund manager Ross Henderson says: “We have the nimbleness of active management when conditions change rapidly.



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Lloyds Banking Group is expected to confirm its intention to retain Scottish Widows tomorrow as it looks to profit from the “mass market” advice gap post-RDR. The bank’s insurance arm was thought to be under threat as part of chief executive Antonio Horta-Osorio’s strategic review of the business, with analysts pointing to a potential £7bn […]

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KPMG has put the insurance industry on alert that it could face more than £15bn in additional annual costs if governments around the world fail to agree and implement global regulatory standards. At the ABI biennial conference in London last week, KPMG chairman of global financial services Jeremy Anderson said regions across the world are […]

A touch of Genius

In the relatively short time since I left formal education, the act of learning has changed dramatically. I remember being taught about revision and exam technique at school but the learning process itself was very much a case of head along to the lessons or lectures and then read the course material. But it seems […]


The reaction to the Treasury select committee’s recommendation to delay the RDR by a year has been vehement and rarely for the financial services industry largely unanimous. Among others, the CII and the ABI have said that any delay to the deadline would increase uncertainty and damage momentum. Another consideration not mentioned by the CII […]


School fees planning

Jeremy Pearson is Technical Support Manager with Canada Life’s ican Technical Services Team. Canada Life offers a range of wealth management solutions, including retirement income planning, estate planning and investment solutions from a choice of jurisdictions, including the UK, Isle of Man and Republic of Ireland. Many parents value the standard of education offered by […]


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