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Wild frontier

Quilter's update got us thinking about gilts (not that many of us have been able to avoid them lately) so we had a peek at our database to see which strategic bond funds were keeping the faith with an asset class proving about as resilient as the chancellor’s commitment to cutting the additional rate of income tax. 

Strat bond fund managers can roam freely across the fixed income universe, and in practice this usually means corporate bonds but some still see a place for gilts. 

The corporate tilt of the sector is highlighted by the fact that only nine of the 88 members of the IA Sterling Strategic Bond sector have any gilt holdings.

The fund with the highest exposure is the £123mn Abrdn Sterling Bond fund, which has an eye-watering 64.2 per cent in gilts - though this fund has a somewhat unique performance target of achieving the return of the iBoxx Sterling Overall Index plus 1 per cent.

It isn’t held by any of the DFMs in our database.

Among the funds are held by allocators in our database - three of them in fact - is Artemis Strategic Bond, which has the highest allocation to gilts - 12.9 per cent.

Although it sits in the IA Strategic Bond sector, Artemis High Income is more of a multi-asset fund, with around 10 per cent allocated to UK equities and run by Ed Leggat, a veteran UK equity manager. 

The yield is 6.3 per cent, and the gilt allocation is actually the second largest investment in the fund. 

The fund is held by one allocator on our database. 

The £2.2bn Janus Henderson Strategic Bond fund is run by John Patullo and Jenna Barnard, two of the best known fixed income managers around, and as we have mentioned before.

It is the second most popular strategic bond fund and has a gilt holding of nearly 2 per cent though it's smaller position hasn't served it especially well lately.

The fund is bottom quartile in performance terms over the past year. Its gilt exposure is presently its fourth largest investment.

It has been bought by two DFMs in 2022 so far and when we last discussed it, we speculated that its bearish-ness might be attracting allocators (it has a whacking great 47 per cent allocation to government bonds).

But with 2022 going the way it’s going at the moment, who’s to say what counts as bearish anymore?

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