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Hunt for yield knows no bounds

Multi-manager T Bailey is looking further afield in the hunt for yield and increasing its exposure to equity income and fixed-interest funds which are unconstrained by geography.

The firm believes equity income now offers greater value than it did six months ago. It still favours equities over bonds but believes opportunities are opening up in the fixed-interest market.

The T Bailey cautious managed fund focuses on bond managers who have the full range of opportunities open to them, from gilts to high yield, on a global basis.

Fixed-interest funds within the portfolio include Thames River sterling bond and Baring directional bond fund, the latter being an absolute return bond fund. T Bailey believes absolute return bond funds have to prove themselves because investors and advisers remain sceptical.

Co-fund manager Jason Britton says: “Opportunities to add value from fixed interest are rare so unless you allow managers to go anywhere in the world and hold any type of bond, you are not giving them a fair chance. One of the things we like about the Thames River fund is the managers have the freedom to go anywhere.

“The more controversial choice is the Baring directional bond fund. It had a difficult 2005 but we have had a long hard look at what they were trying to achieve and how they were trying to achieve it and they have made a few amendments.

“We would not advocate all an investor’s bond exposure in Baring directional but, as one of five fixed-interest holdings in our fund, it is doing well for us.”

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The value of an investment and any income from it can fall as well as rise and you may not get back the amount originally invested. Forecasts and past performance are not a guide to future performance. Some information and statistical data herein has been obtained from sources we believe to be reliable but in no way are warranted by us as to their accuracy or completeness. These are Neptune’s views and as such this document is deemed to be impartial research. We do not undertake to advise you of any change to our views.

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