Bond fund firms reassure investors on Irish exposure

Leading bond managers have reassured investors that their direct Irish exposure is small.

John Pattullo, the manager of the Henderson Strategic Bond fund, says he has no material exposure to Allied Irish Bank (AIB) and Bank of Ireland, which are the most likely companies to feature in bond funds.

He says many other Irish bond issuers should not be affected by government debt and just “happen to be located in Ireland”. (article continues below)

Fatima Luis, who co-manages £443m of bond fund assets at F&C with Rebecca Seabrook, says her Maximum Income Bond fund holds less than 0.5% in AIB.

Luis says: “Funds are diversified – AIB is such a small part of our fund. You are going to see volatility in risk assets generally but as long as their fund is diversified, investors should hold on.”

At Aviva Investors, Andrew Lake, a high-yield manager, says: “We have a little bit of AIB but not much. The overall high-yield index has been quite orderly so far. The market is probably better able to deal with this now than it was in May.”

Irish 10-year government bonds were yesterday trading at yields 5.59 percentage points higher than equivalent German debt.