Aviva multi-managers shift to high yield and convertibles

Mr Fitzgerald said last month he sold the £1.3bn BlackRock UK Gilt All Stocks Tracker fund from his £157.6m Cautious fund - it was previously his largest position at 10 per cent.

He also exited the BlackRock fund from his £126.6m Balanced fund, which previously held a 5 per cent position.

The two Aviva multi-manager funds are joined with the £51.6m Growth fund within the group’s fund-of-funds suite.

“The risk/reward of such a position has deteriorated to such an extent that we believed it was prudent to cut it, as over any reasonable length of investment-time horizon it is unlikely you will make money in gilts,” said Mr Fitzgerald.

The manager said he was retaining a relatively low exposure to short-dated gilts in the Cautious fund.

With the proceeds from the disposals, Mr Fitzgerald has increased his position in the £515.2m Kames High Yield Bond fund run by Phil Milburn and Melanie Mitchell to 3 per cent in Cautious, 4 per cent in Balanced and 5 per cent in his £51.6m Growth fund.

The manager has also initiated a new position in Jupiter’s ¤335m (£280.1m) Global Convertibles fund run by Miles Geldard and Lee Manzi. The fund makes up a 2 per cent position in Cautious, 3 per cent in Balanced and 4 per cent in Growth.

Last month Mr Fitzgerald also added a small position in gold to diversify his funds.

“I don’t think gold is purely an inflation hedge,” he said. “It has certain characteristics which can benefit a portfolio in terms of diversification as it has a low correlation to equities and bonds.

“Not only that but the opportunity cost is zero at the moment because cash rates are so low.”

Elsewhere, in December the manager cut his weightings in BlackRock’s £867m European Dynamic fund run by Alister Hibbert and Harry Nimmo’s £964.5m Standard Life Investments UK Smaller Companies fund.

Mr Fitzgerald said it was a “very difficult decision” removing Mr Hibbert from the portfolios.

“It was largely driven by the fact we were marginally overweight European equities and wanted to bring that down to slightly underweight,” he said.

“We had four European equity managers in the funds and thought that was too many. The most prudent way to reduce the weighting was to take a manager out.

“With the SLI fund… the manager is taking on additional responsibilities with the launch of a new fund and so we thought it was a reasonable time to exit.”