Rathbones protects capital

fund manager repositions portfolio in anticipation of threat of rising corporate bond yields

Fixed interest investors could face capital erosion this year as rising corporate bonds yields threaten total returns from the asset class. In the eyes of Rathbones, corporate bonds reached such over-bought levels last year, the risk premium for holding the asset class reached unsustainably low levels that are now starting to unwind. Luke Hickmore, manager of the £38m Rathbone Ethical Bond fund, said last year's fixed interest rally has resulted in spreads contracting to such an extent investors cannot simply move up the credit curve as a defensive mechanism. "We are now in the reverse ...