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First State’s A-rated EMD star piles into Eastern European bonds
by Robert St George on Oct 30, 2013 at 11:11
‘At the beginning of May we were neutrally positioned,’ Williamson (pictured) told Wealth Manager. ‘During the month we started to take profits.’ By June her fund was two years underweight its benchmark’s average duration, at which point she decided that the market had become too bearish.
‘We try to identify where the market is pricing in too much good or bad news,’ Williamson said.
She therefore began to reinvest, particularly overweighting central and eastern Europe. The region now represents 34.1% of her fund, with significant allocations to Poland, Russia and Lithuania on the grounds that growth is returning to these economies as their export markets recover.
Importantly, Williamson has focused on sovereign rather than corporate bonds in the region, noting local governments’ low debt levels; only 0.4% of her portfolio is held in corporate paper.
This positioning has helped Williamson significantly outperform her peer group recently, returning 0.8% in the three months to the end of September compared with an average loss of 2.2% from the Global Bonds sector. Since inception in October 2011, the fund has returned 11.2% against the peer group's 6%.
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by Alex Steger on Dec 11, 2013 at 10:19