The OPM fixed-interest fund has sold out of the Legal & General dynamic bond fund to increase its investment-grade corporate bond exposure through top-ups to three existing holdings.
The multi-manager says it likes to set aside some space in its portfolio for bond managers with flair such as James Foster at Artemis, Richard Woolnough from M&G and L&G’s Dickie Hodges.
Hodges’ L&G dynamic bond fund has performed well for OPM but the multi-manager says with over £1bn in assets under management, the fund has become big.
OPM runs its fixed-interest portfolio as a strategic bond fund, so even though it makes use of the asset allocation within the underlying funds, it makes its own asset allocation decisions. A small correction in bank debt led OPM to see there was value to be had in this sector. It wanted to access this opportunity but needed to free some capital by selling.
The L&G dynamic bond fund, which comprised 5.2 per cent of OPM’s fund, was sold to fund 2 per cent top-ups to the Aegon investment-grade bond and Old Mutual corporate bond. The Aegon sterling corporate bond fund was topped up by 1.2 per cent.
OPM chief investment officer Tony Yousefian says: “It looks as if that decision was vindicated as bank debt has since narrowed.”
Yousefian is also reducing US exposure in the OPM balanced managed fund to make it more defensive during the summer months when markets tend to be more volatile.
He says: “We have done quite well out of the US and, although we are not expecting a double dip, we wanted to reduce exposure slightly in the short term because we felt the market had got a bit ahead of itself.
“From a currency viewpoint, the US dollar has been quite positive and supportive of decent returns but with the emergency budget in the UK, sterling was gathering strength, which we felt could go against the dollar.”