Augustus AM to invest more heavily in convertibles bonds

Augustus Asset Managers' funds are to invest more heavily in convertible bonds as it feels the equity risk premium is now higher than the premium it can earn on vanilla bonds.

Tim Haywood, investment director of Augustus, a fixed income-focused unit within GAM, says the manager will seek to reduce its long corporate bond exposure as it looks to benefit from future volatility while participating in higher equity prices. He says: “We feel those buying corporate and high-yield bonds now could be too late. At present levels, the asset sub-class is quite expensive relative to our forecast of its future volatility. If I were forced to choose between credit and equity, I would prefer equities. “I could imagine UK corporate bonds underperforming UK stocks, although...