Strategic bond managers go defensive on macro fears

Strategic bond managers are adopting a defensive stance on their portfolios, cutting duration and selling down risk assets on fears over the global economy.

LGIM’s Richard Hodges, SWIP’s Luke Hickmore, F&C’s Fatima Luis, and Chris Higham of Aviva Investors are among those taking risk off the table.  Higham, the manager of the £95m Aviva Strategic Bond fund, has positioned the portfolio the most defensive it has been in the three years since launch, selling down high yield, and buying developed market government bonds. He has cut high yield from a peak of 40% down to 20%, has built up a position from zero to 25% in government bonds, especially gilts and German bunds, and has 10% cash. “Our view at the start of the year was we thought gi...