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Performance review: where Heartwood’s Sippetts finds best value

by Elsa Buchanan on Feb 12, 2014 at 07:00

He has a 5.1% exposure to conventional government bonds, having brought down his allocation to inflation-linked paper, which is a mixture of UK index-linked and US Treasury inflation-linked bonds.

‘This has come down drastically, from being a major positive bet in the first half of 2013.’

He has added to both short duration US high yield and specialist floating rate note funds, however.

‘One real standout for us has been the Pimco Global Capital Securities fund, which had a stellar performance in 2013, and because of its exposure to the capital structure of European financial and banking sector credit, it still has legs,’ he said. ‘We will be maintaining our position.’

He cites ‘non-regulated monthly dealing and relatively illiquid’ specialist funds, such as the M&G European Loan fund (3.9%) as top picks.

‘We’re accommodating the relative illiquidity of the loan market, which is a very specialist market place, with what we see there as a floating rate contract. If we see a rising rate environment, or markets rate start to move anticipating a rise in rate, we’ll benefit.’

Performance

Over 12 months the model, which mirrors the Heartwood Balanced Multi Asset fund, has returned 13.81% with 7.82% volatility. Over three years, the model is up 16.27%.

Performance was largely driven by Sippetts’ allocation to the Heronbridge UK Equity fund, BlackRock European Dynamic and holdings in specialist corporate vehicles and property.

The portfolio’s US theme was supported by the iShares US regional banks ETF, which added 28.1% in sterling terms.

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