Liontrust's Milburn: 'Bond prices are absolutely crazy'

Fixed income manager takes a more cautious approach

During his first year co-managing Liontrust's suite of fixed income funds, head of investment strategy for global fixed income Phil Milburn said the team's punchiest call has been to triple its Strategic Bond fund's exposure to high yield assets during the market sell-off in Q4 in 2018, and then to slash its weighting by two-thirds just a few months later.

Now, he describes the Liontrust Strategic Bond fund as adopting a more cautious approach than many of its peers; the £228m mandate currently has a 9.1% allocation to single B or BB-rated bonds, or so-called 'junk bonds', and has a 57.7% weighting to bonds that are rated single A and above.  According to Milburn, who manages Liontrust's fixed income funds alongside David Roberts and Donald Philips, the portfolio also has "significantly less interest rate risk duration" than most of its peers, with an average overall duration of between 2.5 and three years. "Typically, we run with an av...