Hodges adds to high yield as rate rise looms

LGIM's Richard Hodges has added 12% to his high yield positions in the £1.3bn Dynamic Bond trust, and expects to take exposure to 50% this year.

The manager is reshaping the portfolio in the view interest rates will ‘inevitably’ rise next year as wages inflate. Hodges expects to see an interest rate jump in the next 12 to 18 months, and believes the MPC should raise rates to a more aggressive 2%, as opposed to the 0.75% or 1% forecast. He increased high yield exposure in the fund to 45% in January and may add to this position. “I believe high yield will continue to outperform sovereign bonds and investment grade until interest rates rise. It will be the last of the fixed asset classes I will cut and I am looking to boost th...