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Swip takes global macro view

Scottish Widows Investment Partnership’s multi-manager team has boosted its MM diversity fund’s exposure to global macro strategies with a small holding in a fund of hedge funds from Brevan Howard.

Brevan Howard BH global is a broadly managed portfolio of hedge funds with a bias towards the firm’s flagship global macro hedge fund, the Brevan Howard master fund.

The Brevan Howard master fund specialises in global macro within fixed interest and foreign currency, a strategy that Swip expects to do well when other strategies are performing badly. The remainder of the portfolio is invested in the Brevan Howard equity strategies and Asia emerging markets strategies master funds and the strategic opportunities fund.

London-based Brevan Howard was founded in 2003 by former Credit Suisse head of interest rate derivatives trading Alan Howard, who Swip regards as one of the finest hedge fund managers.

On the equity side of MM diversity, Swip has increased exposure to overseas markets, as it believes that the outlook is poor for UK equities. It has added the Odey opus fund, which makes up 25 per cent of MM diversity’s equity exposure.

Swip’s multi-manager team says this fund’s global absolute return mindset is consistent with its own objective in producing absolute returns and has a good track record in falling markets. Manager Crispin Odey takes a high conviction approach, so that if he does not like sectors or countries, he would rather hold cash.

Head of multi-manager Mark Harries says: “Credit spreads have been priced as if 15 per cent of all investment-grade bonds would go bust. This is an extreme level, as on average 0.8 per cent go bust. We take our leads from the underlying fund managers. We cross-questioned them and decided to fully weight investment-grade corporate bonds so our exposure to the New Star sterling bond fund was upped to 5 per cent.”


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