City Financial re-launches Strategic Global Bond Fund
• Graham Glass appointed Lead Manager to widen fund’s scope into global credit
• Management style also shifts from ‘pure strategic’ to a benchmarked approach with strategic overlay
• New approach reflects excellent opportunities in global credit through 2012
City Financial, the London-based investment firm, has re-launched its Strategic Global Bond Fund to capitalise on the growing investment opportunities in global credit.
The fund, which previously invested only in sovereign debt, will now also provide exposure to corporate bonds at the hand of new Lead Manager, Graham Glass.
Glass, who has over 15 years’ experience managing fixed income assets with an emphasis on credit markets, currently works for Argyll Investment Services and has previously managed €30 billion of fixed income assets in the Paris office of Italian insurance giant, Assicurazioni Generali and formed a key part of the team managing credit exposure within the €350 billion public pension fund of Norway while at the asset management arm of the country’s central bank.
His approach for the City Financial Strategic Global Bond Fund, which was previously managed by Mark Astley of Millennium Global Investments, is to shift from a purely strategic allocation of assets to a blended approach that uses the Barclays Capital Global Aggregate Total Return Index (GBP Hedged) as an oversight for the fund while also incorporating a tactical allocation based on macro forecasts and outright market levels.
This combination means that while the index currently adopts a weighting in excess of 50 per cent to government debt, Glass is positioning the City Financial Strategic Global Bond Fund to have an exposure of just 20 per cent.
“The fund is well-positioned to capitalise on the last three years’ extraordinary volatility in credit markets which has left many bonds pricing in default rates that are quite simply irrational,” said Graham Glass.
“When one considers that investment grade corporate debt is pricing in one in every seven companies to go bankrupt in the next five years, one can see the potential value in today's corporate bond market. Even in the depths of a prolonged recession, the average five-year default rate only ever climbed to 1.55 per cent in 1938, as measured by Moody's. This is one of the reasons for the switch from a plain vanilla government bond fund into one where credit features strongly.”
Andrew Williams, Chief Executive Officer, City Financial, said: “The management of credit exposure requires specialist skills and Graham with his outstanding track-record, will give our clients just that. His success at Generali and Norges Bank is something that we look forward to replicating at City Financial – Graham is certainly one to watch in the coming years.”
Management responsibility for the City Financial Strategic Global Bond Fund was taken over by Graham Glass on 1 January 2012.