Fidelity International has launched the Fidelity UK Gilt fund, an actively-managed strategy to give investors exposure to the high-quality UK government bonds.
The fund will combine the defensive profile of gilts with the returns of active management to create a core portfolio building block with high liquidity and transparency. It will focus on identifying macro themes driving growth and inflation, then translating them into high-conviction positions.
The UK Gilt fund will aim to generate 50 basis points of gross outperformance per annum over rolling three-year periods
The new strategy will be led by Mike Riddell, with Tim Foster and Ravin Seeneevassen serving as co-managers and supported by Fidelity’s fixed income resources of quantitative analysts and research capabilities.
See also: Head to head: Taking stock of gilts
Riddell said this launch was coming as the UK gilt market entered a “more dynamic phase”.
“Elevated yields, shifting rate expectations and ongoing macro uncertainty are creating pricing inefficiencies across the curve.” Coupled with supply dynamics, the UK gilt market currently looks well-suited to an active approach, where managers can selectively express views, he said.
Dennis Pellerito, head of wholesale at Fidelity, added: “UK gilts are reasserting their role as a core allocation for clients navigating an uncertain macroeconomic backdrop.
“With Mike Riddell’s extensive experience in gilt investing, we believe the strategy is well-positioned to deliver both resilience and enhanced return potential for clients.”
See also: Mike Riddell on bonds: No sign of a UK gilts crisis (yet)
Riddell has more than two decades of experience in bond investing, having previously served as portfolio manager at firms such as M&G and Allianz before joining Fidelity.
