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Jupiter pulls £400m from Threadneedle Emerging Market Bond fund
by Max Skjönsberg on Oct 09, 2013 at 10:15
Jupiter Asset Management’s John Chatfeild-Roberts withdrew around £400 million from the Threadneedle Emerging Market Bond fund between June and August, as part of a wider investor flight from risky assets.
The Jupiter Merlin Income Portfolio’s position represented nearly half of the assets invested in the Threadneedle fund, which has dwindled from around £1 billion in May to £342.6 million at the end of August.
‘During the summer we made a strategic decision to reduce our exposure to hard currency emerging market debt in those portfolios that have fixed interest exposure and to increase our exposure to developed market corporate debt,’ said Algy Smith-Maxwell, who runs the £4.7 billion Jupiter Merlin Income Portfolio together with Chatfeild-Roberts, Jupiter chief investment officer, and Peter Lawery.
‘In our equity portfolios we increased our exposure to the UK and US as appropriate at the expense of Asia,’ said Smith-Maxwell (pictured).
Emerging market debt took a battering this summer after US Federal Reserve chairman's Ben Bernanke’s talk of tapering on 22 May instigated a dash away from riskier investments.
‘The past four months have seen an exceptional move away from emerging market fixed income across the industry and this has impacted the Emerging Market Bond Fund,’ said John Peta, co-head of emerging market debt investment at Threadneedle.
Peta believes the panic has subsided and expects emerging market debt to rebound. ‘As investors focus on fundamentals, we expect a return of investor appetite for emerging market bonds,’ he said.
The Threadneedle fund, which is managed by Henry Stipp, has large positions in Russian, Mexican and Venezuelan debt, which combined make up a third of the asset allocation.
‘Chatfeild-Roberts and his team are renowned for making key allocation calls,’ said Jonathan Miller, head of investment research at Citywire. ‘The exit from emerging market debt, where they had nearly 10% exposure in the Merlin Income fund at its peak, is likely to have taken longer than they would have preferred. This is due to the fund's size, which is the largest of the five in the Merlin stable.’
The Jupiter Merlin Income Portfolio has a 31.3% stake in fixed interest spread across the Jupiter Strategic Bond , the Kames High Yield Bond , the Liontrust Global Strategic Bond, M&G Global Macro Bond and M&G Strategic Corporate Bond funds.
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