CDS benefits bonds and retail

Gartmore and M&G assess the potential of credit default swaps in fixed interest portfolios

Gartmore received FSA approval at the end of March to use derivatives in its bond portfolios, something it hopes will add to the flexibility of the funds. While not initially planning to use the instruments to convert any of its existing portfolios into total return bond vehicles, the group believes that it adds further scope to its mandates. Speaking at Investment Week's Global Forum held in South Africa last month, Karl Bergqwist, head of institutional credit at Gartmore, noted credit default swaps (CDS) enable fund managers to get exposure to stocks while hedging out the potential la...