4th October 2011

Thames River multi-manager portfolio update‏

Summary

Bought : Fidelity Strategic Bond Fund 

• New ‘strategic’ addition
• Talented and proven manager
• Diversifying fixed income exposure

We have recently established a new holding in the Fidelity Strategic Bond Fund in our Thames River Cautious Managed portfolio. This flexibly managed offering is run by the talented and highly experienced Ian Spreadbury who supplements his own insights with those generated within Fidelity’s extensive fixed income resources. 

As well as the fund’s longer-term attractions, we are more than comfortable with its current positioning. The economic and market backdrop remains highly uncertain and Ian has utilised the flexibility he is afforded with this mandate to position the portfolio accordingly. The emphasis is on quality with around 40% of the fund invested in ‘safe assets’, including high quality government bonds and cash. Another 40% is invested in investment grade bonds with a bias towards more defensive areas of the market. The remaining 20% is allocated to high yield bonds with a clear preference for bonds issued by companies with good top line revenues and strong free cash flow – exactly the sort of characteristics that help ensure coupon and redemption payments are met. 

The purchase was funded by a trimming of our holdings in Henderson Strategic Bond and Legal & General Dynamic Bond Trust. We still like both these funds but were keen to increase diversification within the portfolio’s fixed income allocation at a time when the Henderson and Legal & General portfolios are similarly positioned. 

Rob Burdett and Gary Potter
Fund Managers

Investments