Liontrust's Mabbutt outlines strategy for credit fund launch

Liontrust's new Global Strategic Bond fund will avoid corporate bonds and favour emerging market government debt and currencies.

Michael Mabbutt, recently appointed head of global credit, will run the new fund when it comes to market next month. He said liquidity risk in the corporate bond space is too high and is not reflected in the risk premiums. "Yields on US high yield corporate bonds have gone down to 5.8% this year from 6.2%, so the illiquidity premium is disappearing," he said. As a result, his team will maintain low exposure to this asset class. Instead, he will run the portfolio with a bias towards emerging market government bonds and currencies, which are not experiencing the same liquidity issues...