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Investec puts fixed-income bond range on the defensive

Investec head of fixed income John Stopford has moved to a more defensive position across the £18.7bn fixed-income bond range as his expectations for global growth weaken.

Stopford says the chances of improved global growth and additional monetary stimulus in the US and Europe are fading.

He says: “We have been reducing risk as we are nervous that we are going to see a period of investors becoming risk-off.

“US employment data has started to disappoint and the hurdle for additional quantitative easing is high.

“It will not happen until there is weaker economic growth and similarly in Europe the scope for material further easing requires further deterioration of the crisis.”

In the £359m Investec strategic bond fund, Stopford has bought an 8 per cent holding in the iTraxx crossover credit default index as protection on the fund’s 56 per cent exposure to credit.

In the £194m Investec monthly high-income fund, Stopford has bought a 7 per cent position in the iTraxx crossover credit default index as protection on the fund’s 93 per cent credit exposure.

Credit default swap indices are commonly used in order to protect investors that own bonds against default.

Stopford has cut the emerging market foreign currency exposure in the £165m Investec global bond fund from 17 per cent to 12.5 per cent.

He has also marginally reduced his exposure to emerging market bonds.

Stopford says: “We have sold bonds in Indonesia and the Czech Republic this year.”


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