The multi-manager holds over 30 per cent in investment-grade bonds within its fixed-interest fund and has reduced its sub-investment-grade exposure from 26 per cent last September to its current level of 9 per cent.
Fund manager Tony Yousefian is adamant that there is value in the fixed-interest market, particularly at the investment-grade end. He points out that the sub-investment-grade market is more tuned to the equity market and believes that if there is any value if this area of fixed interest, it is to be found at the quality end.
Yousefian says: “The sub-investment-grade market has had a decent rally but this is, in our opinion, a fool’s rally on the back of equities and is not going to last. Spreads have begun to widen over the last few weeks and defaults are starting to appear at the riskier end of the market. We think that these defaults are likely to increase by the first quarter of 2009.”