John Pattullo, the head of retail fixed income at Henderson, has introduced a 12% cash weighting to his £968m Strategic Bond fund.
Pattullo (pictured) says his team decided to slash its long weighting to financials from 50% to 35%, with the bank weighting going from 30% to 14%.
He points to developing concerns over senior bank debt.
Pattullo says: “We think some of the quality banks will trade down a bit with the market. We do not see the likes of BNP and HSBC failing but that does not mean the bonds will not trade down a bit and if we run a bit of cash it gives us the opportunity to buy them back at a lower price. (article continues below)
“The worst banks in Europe, the regional ones in Spain and Germany, will probably restructure heavily and that will affect the whole banking sector and we want to be in a position to go back into the top quality names.”