Easy money has been made, says winner Read

Paul Read, a co-manager of the £4.8 billon Invesco Corporate Bond fund, describes valuations in the corporate bond market in February and March this year as “once in a career”.

Read was talking to Fund Strategy before being awarded, with his co-manager Paul Causer, the award of outstanding fund manager at the Old Broad Street Research (OBSR) awards.

However, while areas of value still remain, Read says the easy money in the sector has been made.

“It’s all about managing expectations,” he says. “The corporate bond story is still strong and the market is in good shape technically and fundamentally, but valuations have moved on from where there were in February and March.”

While Read and Causer have run low duration portfolios for some time, Read says it is unlikely that in the near-term there will be another substantial leg-down in government bond markets. Read also predicts short-term interest rates will stay low right through 2010, with base rates unlikely to up for another year at least.

So where are the pockets of value? Read says bank capital, elements of high yield, other financials and some aspects of the new issue market all offer good valuations.

Speaking of the award, Read says he and Causer have benefited from the “Henley model” at Invesco Perpetual. “In fund management its important to take risk, and at Henley we can stand back and take risk for the ultimate benefit of out long term investors.”

In the other OBSR awards, Jupiter was named outstanding investment group, Dan Nickols, manager of the Old Mutual UK Select Smaller companies won outstanding new talent, while Jim Stride at Axa Investment Managers was handed the award
of outstanding contributor to the industry.

Edward Bonham Carter says while last year provided a proper stress test, the business did well through it. “It’s about having a balance of conviction in your ideas but not being stubborn and arrogant”, he says. “We are lucky enough to have fund managers that have been around for a long time and this award is recognition of their hard work and talent.”

For more on the awards and their methodology see www.fundstrategy.co.uk

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