Church House's Wharton hikes FRNs from zero to 30%

Jeremy Wharton, manager of the £175m Church House Investment Grade Corporate Bond fund, has increased his allocation to floating rate notes (FRNs) from almost zero at the start of 2014 to 30%, as a means of protection against future interest rate rises.

He said investors should be aware of the risks posed by rising rates, as well as a lack of liquidity in the corporate bond market, particularly in high yield. "It may not be the right place to be at the moment, but the FRN position will benefit from rising rates," he said. He predicted rates may well be raised in the UK before the end of the year, even though the Bank of England has indicated it is more likely to be 2016, as "inflation has a lagging indicator and he [Governor Mark Carney] has got to be ahead of the curve". Wharton said a zero interest rate policy was introduced whe...