Investments  

Bond veteran Hodges attracts inflows of £35m a week

Bond veteran Hodges attracts inflows of £35m a week

Dickie Hodges, the veteran bond fund manager who quit L&G for Nomura in 2014, has attracted net inflows of $1.9bn (£1.4bn) this year into his Global Dynamic Bond fund.

The fund is now £3.66bn in size, and those inflows come to about £35m a week. 

The fund has returned 1.41 per cent this year to date, compared with an average return for the IA Sterling Corporate bond sector of 0.35 per cent. 

Over the past five years the fund has returned 37 per cent, ranking it third of 69 funds in the sector. 

 

Hodges has presently positioned the fund on the basis that inflation will be “structurally higher” for the next three to five years, partly as a result of his view that central banks will be slower to increase interest rates than many market participants presently expect.

As a result he has been increasing his investments in emerging market debt.

This is on the basis, he said, that while many emerging market central banks have been increasing rates now in anticipation of similar actions from developed market central banks, he believes emerging market interest rates will be cut in future as economic growth will be slightly less robust.

By buying emerging market bonds at the present high interest rate, Hodges is hoping the capital value of those bonds will increase when, after interest rates have been cut, the newer bonds that come to market will pay a lower level of income than those which Hodges is buying today. 

Hodges said a significant slug of the demand to invest in his fund this year has come from investors in Asia.  

Darius McDermott, managing director at Chelsea Financial Services, has long been a fan of Hodges. 

He said: "We have known Dickie Hodges since his days at Legal and General. There are very few fixed income managers in the world who understand the range of the bond market as well as him. His understanding of hedging strategies and of the futures market is as good as anyone Ive ever met." 

david.thorpe@ft.com