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Investec’s Saunders doubles investment grade corporate bond exposure

Investec head of multi-asset Philip Saunders has doubled his exposure to investment grade corporate bonds in the £390m Investec Multi Asset Protector fund, in the expectation that they will perform as a defensive asset.

The fund’s exposure to corporate bonds has risen from 7 per cent to 15 per cent in the past two months.

Saunders says the fund is positioned cautiously but he considers there is too much pessimism among investors about the global economy.

He says: “We are now positioned relatively cautiously because investor sentiment is so poor at the moment. It suggests that short of Armageddon, the downside is not as much as people fear.

“We are holding less equities and more investment grade bonds. Given that sentiment remains poor and our expectations that economic growth will be on the weaker side, investment grade bonds will deliver a superior return to cash. Cash rates are very low at the moment.”

Saunders says it is unlikely that government bonds will outperform corporate bonds if the market turns volatile because investor sentiment is already very low.

He says: “We expect investment grade bonds to act as a defensive asset. On a long-term basis, certain equities are more attractive than investment grade bonds, but we are cautiously positioned so we would rather hold these bonds.”

Rowan Dartington head of collectives research Tim Cockerill says: “So long as economic uncertainty remains and interest rates are low, investment grade bonds seem likely to be supported by the market.”



Aviva to review exit fees on old pension plans

Aviva has become the first provider to commit to tackling unfair exit fees on old pension plans following pressure from industry experts and politicians. Last month, a Labour policy document warned of the “damaging” impact of exit fees. The Association of British Insurers has committed to uncovering the extent of the problem, with Hargreaves Lansdown […]

OOC 9 August 2012

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Santander cuts NewBuy rates to 4.99%

Santander has cut its NewBuy mortgage rates by up to 0.7 per cent. The lender has cut its three-year fixed rate from 5.49 to 4.99 per cent. It has reduced its five-year fixed rate from 5.49 to 5.29 per cent and its seven-year fixed rate from 5.99 to 5.29 per cent. All three products come […]

FTSE blog: Banks and miners lead the way as FTSE 100 passes 5,800

The FTSE 100 has passed 5,800 as investors continued to look to riskier assets on the back of Friday’s strong US jobs data. At close, the FTSE 100 was up 0.4 per cent to stand at 5808.77 with banks and miners making the largest gains. Royal Bank of Scotland Group made the biggest gains rising […]


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