“In addition, wage growth is not coming through, and in regards to the jobs being created, these are poor quality. They do not pay – and are unlikely to get people spending much more.”
Mr Bezalel, who has managed the fund since its launch in June 2008, has since achieved a significant total return of 84 per cent versus an IMA Sterling Strategic Bond sector average of 45 per cent for the period.
In the past 12 months, he has matched the peer group mean performance of 6 per cent.
Cautious air growing among bond managers
Ariel Bezalel’s move to be more cautious is an about turn for him.
Just last year, he told Investment Adviser how he was seeking out esoteric, high-yielding areas of the market, including backing three loan-recovery companies.
Mr Bezalel also had pub company financing and oil rig financing company bonds, as well as paper issued by gold miners – all of which featured in his top 10 holdings at the end of February last year.
However, the manager seems to be more focused on protecting the portfolio than shooting the lights out.
This comes as more managers have been treading with slightly more trepidation when it comes to fixed income.
Invesco Perpetual bond veteran Paul Causer said earlier this year his Global Distribution fund – which invests in bonds and equities – would have a “toppy” weighting to equities, given what he then saw as relative value “as good as I have ever seen it”, particularly in stocks that paid a dividend.
Also, in July this year, a survey of reserve managers responsible for running more than 50 per cent of the world’s central banks’ assets found that many are gearing up to offload longer-term debt to protect themselves from losses when the Federal Reserve’s quantitative easing strategy comes to a close later this year.
The research, carried out by HSBC and Central Banking Publications, suggested central banks had already started to switch over into other riskier assets, including equities.
