Aviva's Higham picks his top corporate bonds as liquidity crisis lurks

Like many investors Aviva’s Corporate Bond fund manager Chris Higham is on the hunt for yield and he explains why Jaguar Landrover, which is yielding an impressive 8%, is such a good deal.

‘We do think that the yields on offer from between 5% for investment grade bonds to 8% for high yield bonds are likely to prove to be very attractive for investors over the next five years,’ he said.

‘In Jaguar Landover you are getting a yield in excess of 8% for a company whose balance sheet has never been as strong as it has been today and whose product line-up is very, very strong.’

Another star performer has been packaging company Reynolds Group, which is backed by a New Zealand billionaire and has given a 50% uplift.

Higham also talks through the liquidity challenges currently facing the sector and why he’s gearing up for the situation to worsen before it begins to ease.

‘It is an ongoing challenge but it is likely to get worse before it gets better due to the regulatory conditions being imposed on banks,’ he said.

Higham runs four bond funds and across all his funds has a return average of 45% over the last three years, compared to 37.9% for the average manager in the corporate bond sector.

Within this the Aviva Corporate Bond fund has returned 43.94% compared to 33.54% in the Markit iBoxx Sterling Non Gilt benchmark.