“We are going into the teens, roughly half of our exposure from one year ago,” Stopford said. “High yield will be playing a smaller role going forward.”
Currently the fund allocates 24.8% of its assets to high yield corporate bonds, compared to around a third of assets a year ago.
He still prefers equities and remains positive, however, noting that equity income is still the most volatile asset despite rising dividends.
Commenting on emerging market debt, Stopford said the key is to be selective.
“We’ve added developed market sovereign debt to the portfolio, including Australia,” he said.
One area in which he sees opportunity is infrastructure, which carries both bond and equity characteristics, but is underdeveloped.
“The good thing about a multi-asset portfolio is the evolution of the fund, it can fundamentally change. The best returns for an income fund are over time, in assets with below average volatility.”
In the last three months to date, the fund has performed with a cumulative average of 2.7%, compared to the IMA Mixed Investment benchmark which performed 2.1%, according to FE Analytics.
