Easing default risks are behind Reed's focus on lower-rate bonds

Top-performing fixed interest manager Paul Reed is maintaining his focus on lower-rated bonds in 2010 after noting an easing of default risks.

Aberdeen’s Reed, who runs the £36m Marlborough High Yield Fixed Interest fund, has a strong bias towards lower-rated securities – with nearly 50% of its holdings in B-rated credits and almost 20% rated CCC or below. “There are rewards to be had when you identify value among lower-rated credits and we use a bottom-up approach to find companies with robust management and  the ability to control risk,” he says. “The picture emerging for 2010 is one where the results coming in from companies are often beating expectations and the default rate is looking likely to end up a lot lower than...