View more on these topics

Skandia and OPM split on strategic equity exposure

Skandia Investment Group and OPM Fund Management are split over whether strategic bonds should have a high exposure to equities.

Under the Investment Management Association’s definition, strategic bonds are allowed a 20 per cent exposure outside of sterling fixed-interest securities.

SIG head of investment res-earch Adam Smears, who runs the £142m Skandia strategic bond fund, says 20 per cent is too high. He says: “Equity has significantly more volatility than fixed income. Around 20 per cent allocation to the higher volatility asset class means it will dominate the returns of that portfolio. To me, this type of fund is more like a multi-asset fund than a bond fund.”

Smears says a 10 per cent exposure to equities sounds more sensible.

The Skandia strategic bond fund has a 9.8 per cent weighting in the £6.3bn M&G optimal income fund, which can hold up to 10 per cent in equities.

But OPM Fund Management chief investment officer Tony Yousefian says the flexibility to hold a 20 per cent weighting in equities is essential to strategic bond funds.

Yousefian, who runs the £38.4m EFA OPM fixed-interest fund, has a 9.5 per cent exposure to equities through an 8.5 per cent position in structured products and the rest made up of a position in the £553m Artemis high-income fund, which can hold up to 20 per cent in equities. He says: “Strategic bonds should be flexible to invest in any asset class within sensible limits.”

Equilibrium Asset Management investment manager Mike Deverell says: “I do not like it when strategic bond managers invest in equities as the funds may take on more risk than investors expect.”

Recommended

Out of context

“I did quite well at the start but for some reason the more I drank the less I won.” AWD Chase de Vere’s Patrick Connolly’s luck was out at this year’s Cheltenham festival. “I do not want to be fiddled with.” Forty Two Wealth Management chief executive Alan Dick on what he wanted from Osborne’s […]

2

UK inflation falls to 3.4%

The UK consumer prices index has fallen to 3.4 per cent in February, according to the Office for National Statistics. The consumer prices index is down 0.2 per cent from 3.6 per cent in January. The retail prices index fell to 3.7 per cent, from 3.9 per cent in January. Inflation has fallen markedly since […]

Royal London holds annual with-profits bonus rates

Royal London has held annual bonus rates across the majority of its with-profits products as the provider announced an increase in final bonus payouts. Annual bonus rates for Royal London policies have been held at 0.5 per cent for both single premium and regular premium business. Final bonus rates for Royal London single premium and […]

10

FSA warning over investment switching costs

The FSA is concerned that advisers are not giving enough consideration to the additional costs clients face when moving them from one investment proposition to another. The regulator will publish a paper on assessing suitability of replacement business and centralised investment propositions in the coming weeks. It will look at advisers’ use of model portfolios, […]

Jelf flexible benefits

In Focus: How to choose a flexible benefits provider — seven top tips

Jelf Employee Benefits looks at some of the key considerations employers should think about when reviewing and choosing a flexible benefits provider. Choosing the right benefits for your employees is one thing but delivering a successful employee benefits strategy is about understanding the complete picture and delivering it in a personalised way so that it resonates with each and every individual in your business. 

Newsletter

News and expert analysis straight to your inbox

Sign up

Comments

    Leave a comment