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Hawksmoor's Scott buys bonds to benefit from a rate rise
by Matthew Goodburn on Jan 11, 2011 at 07:01
Hawksmoor chief investment officer Richard Scott (pictured) has been increasing his exposure to fixed interest assets that will benefit from a rise in interest rates.
Former Wealth Manager cover star Scott, who co-manages the multi-asset Vanbrugh fund with Daniel Lockyer, told Citywire he had been reducing overall exposure to corporate bonds in recent weeks while at the same time taking the fund’s exposure to interest rate rise –linked fixed interest to 6% of the fund.
Rate rises ahead?
Scott has added the open ended Monument bond fund to an existing position in John Pattullo and Jenna Barnard’s closed-ended Henderson Diversified Income investment trust, with the latter currently trading at a 6.5% discount.
‘Both of these funds invest in fixed interest assets which rise with changes in interest rates,' he said.
The recently added Monument Bond fund invests in high quality residential mortgage-backed securities (RMBS) from the UK, Europe and Australian markets.
‘It invests in only high quality mortgage backed securities which we think it is currently one of the best asset classes in the fixed interest space.’
At the end of November, Monument was nearly 66% invested in AAA-rated RMBS.
Scott said he might not get the timing perfect, but expected interest rates to start rising in the next few months.
‘We might be some way from the turn in rates, but we think that now is the time to hold some fixed interest securities that could benefit from an interest rate rise.’
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