Allocators trim fixed income for property


Equilibrium Asset Management is trimming its exposure to bond funds so it can increase commercial property holdings.

The move follows concern over the prices and valuations in the fixed income market.

Equilibrium investment manager Mike Deverell prefers to go to strategic bond funds for fixed income exposure, owning the £268m Invesco Perpetual Tactical Bond, £616m JP Morgan Strategic Bond and £127m TwentyFour Dynamic Bond funds.

But he has shifted some money from strategic bonds to commercial property, moving from 10 to 15 per cent in property as a result.

Deverell says: “Fixed income is starting to look a little bit expensive.”

Lowes Financial Management investment manager Douglas Millward is making a similar move with his portfolio, seeing improving property opportunities as a sign of recovery.

He normally advises a 10 per cent allocation but it advising an increase to 15 to 20 per cent, highlighting the £989m Henderson UK Property, £986m Ignis Property and £833m L&G UK Property funds.

Millward says: “We are not as nervous about bonds as others but it is something we are doing as well. I think people will start moving back to property.”

However, Charles Stanley Direct head of investment research Ben Yearsley is more dubious about such a move: “I do not see the need to rush out of fixed income and I cannot make my mind up about property.

“If you look around the UK you see loads of empty properties, I cannot outright call them essential investment ideas.”