Henderson head of retail fixed income John Pattullo has introduced a 12 per cent cash weighting to his £968m strategic bond fund.
Pattullo says his team decided to slash its long weighting to financials from 50 to 35 per cent, with the bank weighting going from 30 to 14 per cent.
He points to developing concerns over senior bank debt.
Pattullo says: “We think some of the quality banks will trade down a bit with the market. We do not see the likes of BNP and HSBC failing but that does not mean the bonds will not trade down a bit and if we run a bit of cash it gives us the opportunity to buy them back at a lower price.
“The worst banks in Europe, the regional ones in Spain and Germany, will probably restructure heavily and that will affect the whole banking sector and we want to be in a position to go back into the top quality names.”