Martin Walker has moved overweight the mining sector for the first time in his near 20-year fund management career.
The manager of the group’s £240.5m UK Aggressive fund said his most recent moves had been to increase oil adding he had been “significantly increasing” exposure to the mining sector.
“I am now overweight the sector, which is probably the first time in my career that I have been so,” he said.
While the FTSE All Share Metals & Mining index has risen strongly in the past year - 47.5 per cent - it is still down 42 per cent in the past three years, according to data from FE Analytics.
The manager said in a webcast to clients he was in favour of buying up these “value opportunities” as opposed to the bond-like equities held by other UK funds at the group.
Mr Walker said he believed “we have seen the top of the bond market” and so wanted to avoid equities such as pharmaceuticals and tobacco stocks which have been bought up by investors because of their bond-like qualities.
“I cannot help but feel we are at an epoch defining turning point and my concern is a bear market in bonds,” he said.
“I don’t want to own bonds or bond-like equities [in that scenario]. I want value opportunities.”
The manager added he thought there would be rising inflation in the UK, in spite of the first negative consumer prices index reading in decades.
“Reasonable global growth will undermine the deflationary death spiral [argument] which holds sway in the bond market and if that happens I think there will be a downdraft on bond-like equities,” he said.
“It won’t move in a straight line. We have probably seen most of the rise in bond yields for this year but over the medium to long term there will be a downdraft on these sectors.”