Speaking on the PA Podcast, Onuekwusi, manager of the LGIM Multi-Index fund range, said that given the pressure central banks have put on yields, you also have to be active in terms asset allocation across the fixed income spectrum, because there are going to be times when certain bonds look extremely cheap versus others.
It is also partly as a result of this that, he said, the firm has not been a big seller of duration in the multi-index range.
“Even in our low risk funds, we maintained our duration positions and it has worked out pretty well,” he said.
However, he did add that, while diversification is important in this world of unprecedented pressure on yields from central banks, across the range cash levels are as elevated as they have been since the funds were launched – in the lowest risk portfolios cash accounts for up 20% of the total allocation, it has been below 10%.
“The ultimate defence is cash. That is how you don’t take any risk. But, if you have a medium term view you have to take risk to get a return,” he added.
