Allianz Strategic Bond dumps corporate bond exposure on valuation concerns

Corporate bond less than 1% today

The £3.1bn Allianz Strategic Bond fund has been selling riskier assets in response to valuation concerns, with the top performer effectively dumping all of its corporate bonds in favour of sovereign bonds.

Mike Riddell, lead manager of the fund, which won the £ Strategic Bond category at the Investment Week Fund Manager of the Year Awards 2021, said developed market corporate bonds are currently "particularly expensive" and he therefore has a preference for exposure to emerging markets.   The fund's corporate bond exposure has fallen from its June 2020 peak of 66.4% to less than 1% today, according to FE fundinfo data. Government bonds now represent almost 95% of the portfolio.  Riddell explained that his team are not expecting an imminent shock to bond markets, but their current "worry...