Cautious Managed funds rotate from bonds to equities

SECTOR ANALYSIS

Fixed income assets have driven gains in some of the top funds in the IMA Cautious Managed sector this year, but several managers are taking profits and piling into equities.

Cautious Managed funds can invest up to 60% in shares and at least 30% in fixed interest and cash. The Henderson Managed Distribution fund and Prudential Cautious Managed Growth funds are both up to their maximum allowed weighting to equities. The managers recycled profits from investment grade corporate bonds and, in the case of Henderson, from gilts, to move into equities. Jenna Barnard, co-manager of Henderson Managed Distribution, trimmed European high yield holdings as the asset class rallied 14% this year. She said: “We now think valuations are much more favourable in equi...