Bond star Hodges: Volatility back at Lehman levels

Legal & General Investments' Richard Hodges has fled to cash and trimmed high yield in a move to protect his £1.8bn Dynamic Bond trust against Lehman-like market conditions.

Hodges, the top performer in the IMA Strategic Bond sector over the last three years, said liquidity had vanished from markets in the last few days in a scene reminiscent of the 2008 crisis. "Events of the past few days caused volatility to spike to levels not seen since Lehman fell in September 2008," he said. "The big market moves were caused by politics and a deteriorating economic outlook, and the severe uncertainty caused liquidity in risk assets to completely dry up." As a result Hodges has built up his cash position - which was at 16% at the end of June - while adding index ...