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Tony Yousefian, chief investment officer, expected high-yield debt "to prove more responsive to the health of the underlying company", particularly if equity rallies have indicated the recession may have past its low point.

"It's not surprising gilt yields are rising, with such enormous volumes of UK public debt on its way and little indication as to how it will get soaked up by the credit markets," he said.

"What is more, this is dragging down investment-grade bonds, which are becoming more and more correlated with gilts.

"While inflationary worries over quantitative easing still loom ominously, gilts are more likely to take fright over the unsustainable level of public debt rather than inflation, which may not bite for another two or three years."

As a result, Mr Yousefian said, the group had cut its holding in the M&G Corporate Bond fund and increased its exposure to the Artemis Strategic Bond fund, which has a large weighting in financials.

"What attracts us to their financial bond exposure is that it includes many companies that are thought to be 'too big to fail'," he said.

The Fixed Interest portfolio has also added a 4 per cent weighting in the Aegon High-Yield Bond fund on the view the asset class discounts the risk of 70 per cent of issuers defaulting over five years.