Investments  

'I’m considering buying my own fund', says manager

'I’m considering buying my own fund', says manager

Bryn Jones, fixed income director at Rathbones Unit Trust Management, may use some of the 58 per cent cash he has in his Isa to buy into his own fund.

Jones, who manages the £2.4bn Rathbones Ethical Bond fund, said he has long been invested in the fund, but not added any new money to his holding in five years.

The fund remains a top quartile performer over three and five years in the IA UK Sterling Corporate Bond sector over three and five years, but has lost 13 per cent over the past year amid a general sell-off in bond markets.

His fund is the largest specifically ethical bond fund in the world, and the fifth-largest corporate bond in the UK market.

Bonds have sold off this year as investors are concerned about the impact of inflation on the asset class. 

Jones' fund is underweight duration right now, meaning it is positioned for further rate rises and inflationary pressure, but he said that, over the longer-term, he expected policy makers to cut rates and implement quantitative easing in times of economic strife.

This action would be expected to keep bond prices high relative to history.

Jones presently sees value in the riskier end of the bond market, taking the view that while a recession may happen, “it also may not happen, but the way investment grade bonds are priced now, it implies a much higher level of defaults than the historic average, and the same in the high yield market.

"In some parts of the bond market, yields are the highest they have been for decades", he explained.

Yields move inversely with prices, so if yields are the highest they have been for a decade, prices are the lowest they have been for a decade.

High-yield bonds are those most sensitive to the performance of the wider economy, and have a credit rating below BBB.

david,thorpe@ft.com