Axa Distribution index-linked bond exposure at all-time high

AXA Investment Manager's Richard Marwood has taken his Distribution fund's allocation to index-linked bonds to an all-time high on the belief inflation is unlikely to fall.

Marwood has used cash and new inflows to take the £536m fund’s weighting to index-linked bonds from its average of 35% up to 40%, having reduced the portfolio’s exposure to gilts from 7% to 2% at the start of this year. “Neither cash nor gilts are an attractive asset during this period of prolonged inflation,” Marwood said. “Yields on conventional gilts are very low and you have got to go a long way out on the yield curve before you find a gross redemption yield of 3%. RPI is 4.6% and I cannot see a scenario where this would fall, so returns on gilts are negative in real terms and cas...