Richard Woolnough has moved to close the US dollar exposure on the £15.7bn M&G Optimal Income fund as he sees better value in sterling.
While most of the fund is hedged back to sterling, the M&G Optimal Income fund had long held nearly 10 per cent in the dollar, due to the superior economic recovery in the US.
Woolnough has now decided to close the position, already reducing it to 4.7 per cent by the end of September, hedging the dollar exposure back to sterling because the relative value in the US is no longer there.
In a fund update, M&G said: “Recent data indicate that the UK economic recovery is gaining momentum, and Richard has therefore started to reduce this dollar exposure.”
Mr Woolnough also turned slightly more bullish on the outlook for bonds in September, increasing the duration on the fund, and therefore the fund’s sensitivity to interest rate rises, from 3.3 years to 3.6 years.
The manager still has a shorter duration than his neutral position, reflecting that he “expects that bond yields will rise further in the medium term”, but M&G said the “move reflects the increased value that rising yields of recent months have brought”.