Investments  

Artemis' Foster boosts cash in £1.3bn fund

Artemis' Foster boosts cash in £1.3bn fund

A combination of the more "difficult" economic background and higher interest rates has prompted James Foster, who runs the £1.3bn Artemis Strategic Bond fund, to increase the amount of cash he holds in his funds.

Mr Foster said: "We have been adjusting the portfolio to reflect a more difficult economic background and tighter monetary policy for some time.

"We have increased the cash position, significantly raised the weighting in gilts and reduced high-yield bonds."

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Gilts, which are UK government bonds, have risen sharply in value in recent weeks as investors view them as a safe haven at a time of heightened political uncertainty around Brexit.

Investors also feel that in the event of a no deal Brexit, the Bank of England will cut interest rates, and that would mean the interest rate on future bonds issued by the UK governments would fall in line with interest rates, that makes the interest rate on the bonds available to invest in right now, relatively more attractive, and so, should mean that the value of UK government bonds issued today would rise in the event of a no deal Brexit.  

Mr Foster has 15 per cent of the fund invested in gilts.

He said he expects some deal to be reached between the UK and the EU, and on that basis, has cut his US dollar exposure, on the basis that sterling will rise.

Peter Elston, chief investment officer at Seneca, said he would "rather put his hand in a blender" than invest in UK gilts, as he feels interest rates will rise.

david.thorpe@ft.com