Citywire printed articles sponsored by:
View the article online at http://citywire.co.uk/wealth-manager/article/a697749
Henderson's Burvill: a 'panic moment' is coming for bond investors
by Matthew Goodburn on Aug 15, 2013 at 14:03
Burvill, who runs the equities portion of the fund, alongside bond managers John Pattullo and Jenna Barnard, is relatively bullish and expects the FTSE 100 to test the 7,000 level this year but he is also wary of a ‘panic moment’ for bond investors later this year and says equity investors need to be aware that this could upset markets this autumn.
He told Citywire Selection: ‘Despite their gentle words, the Fed will have to go for tapering as soon as they can. Gilt and treasury investors have not been investing with any thought of losing capital and GDP worries have kept people in the bond market.
‘Ten year yields on treasuries and gilts are getting higher and at some stage I expect to see a panic moment in the autumn. Equity investors will need to keep an eye on that but I remain bullish overall.’
The fund has done well from its equity exposure in the year to date.
‘For those who have been bullish up to now it has been a simple valuation argument so if we are actually seeing an economic recovery everything would be in our favour although it is still not a one way bet.’
‘If the Federal Reserves does start to look at raising interest rates as non-farm payrolls improve, we could see more [upwards] wage pressure which could bite into corporate profits.’
The fund has around 55% in equities, just shy of its 60% limit, and the weighting had been at 57% a few weeks ago, before selective high yield exposure was added and cash increased slightly in case the market pulled back.
The top performing equities over the past six months have all come from consumer names as the UK consumer has started to increase spending levels.
Key performers have included high street names Marks & Spencer, Halfords and Kingfisher, along with construction and housebuilder stocks Atkins and Bellway respectively, and Burvill has now taken around 2% of the fund out of such names after a strong run.
News sponsored by: