Fixed income hike promises results

Brian White, who runs the GHC Strategic Managed fund, forecasts healthy returns from his newly acquired bond allocation, which replaced some of the portfolio’s weighting in British equity.

Brian White, head of collectives at GHC Fund Management, added bond exposure to the firm’s Strategic Managed fund of funds in March.

The portfolio’s fixed income allocation has since grown to 13%, following the introduction of the Aegon Global Bond and Henderson Strategic Bond funds.

White says March was too early to enter the asset class in hindsight, but he intends to increase the weighting further.

He says: “Two interest rate rises have been priced into the market and we think inflation will be less of a problem going forward. We expect the total return on fixed income to be greater than that on the whole of the market over the next 12 months.”

White increased his bond exposure by reducing his British equity weighting.

GHC rebadged the £4m fund, from Active Managed, last December.

The portfolio also adopted a revised total return mandate and moved away from investing purely in closed-ended funds.

However, White has taken a gradual approach to reshaping the portfolio, by slowly trimming his exposure to investment trusts. He adds: “We did not simply blast everything out of the fund on December 1. We take premiums and discounts into account when selling on the closed-ended side.”

About 20% of the fund is now in open-ended funds. There are 32 holdings in the portfolio overall, although White expects to reduce the number to 30 by the end of this week.

A total of 15-20 underlying funds is the ideal portfolio size, he adds. On the equity side of the fund, White has added allocations to Schroder European Alpha Plus and Rensburg UK Select Growth Trust, run by Mark Hall.

Away from the traditional asset classes, White has also introduced a 5% allocation to an exchange-traded fund investing in hard and soft commodities.