Gray sells gilt holding after ‘unbelievable’ gains
Manager sells direct gilt holdings from flagship fund, crystallising ‘unbelievable’ profits.
Mam Funds’ star manager Martin Gray has sold out of UK government bonds in his flagship £790m CF Miton Special Situations fund.
Mr Gray said he had roughly 5 per cent in gilts at the start of the year but then he topped this weighting up to nearer 10 per cent of the vehicle as the securities rallied amid panic selling of euro-based assets.
But the manager has now sold out entirely, crystallising gains from the asset class, and now only carries residual, indirect exposure to gilts.
“We have made unbelievable returns from gilts, including a 40 per cent gain from one holding and 10 per cent in the past six weeks from another,” he said.
The fund is the second-best performer out of 91 in the IMA Mixed Investment 40-85 per cent Shares sector over five years. It gained 31.8 per cent, compared with an average gain from funds in the sector of 0.3 per cent, according to Morningstar.
“I’m not trying to pick a bottom or a top of the market as that is a dangerous thing to do, but on a risk/reward basis, there is more of a risk that a politician will cause a spike or the market will misinterpret something, so we don’t need to be there,” said Mr Gray.
The yield on a gilt moves inversely to its price meaning that if yields rise, the capital value of the gilt depreciates.
“The trade doesn’t mean I am bearish on gilts because if there was an opportunity to get back in, I would consider it,” he said.
The manager said the £229.6m CF Miton Strategic fund, which he also runs with Mr Sullivan, still retains some direct gilts but that exposure, combined with gilts held by sub-funds he owns, was in single digits.
Elsewhere in Strategic, Mr Gray said he had topped up his exposure to Japan by increasing his exposure to the £468m Jupiter Japan Income fund run by Simon Somerville and Dan Carter and to the £521m CF Morant Wright Japan, one of Mr Gray’s top 10 holdings.
More on Multi-Manager Funds
- Fund selector: Keep an eye on the exit for high yield
- Beware piggybacking on eurozone - Lanning
- JPMorgan’s Lanning trims UK holdings