Gartmore's Bond Funds raise financial exposure

Karl Bergqwist and Simon Surtees, Gartmore's co-heads of fixed income and managers of the Gartmore Corporate Bond Fund and Gartmore High Yield Corporate Bond Fund believe the worst may be over for the financials sector and have been adding to their positions in the bonds of a number of banks and other financial institutions.

"We have become increasingly positive about financials following the sharp falls of January and February and consider the rescue of Bear Stearns by JP Morgan in March to have been a pivotal moment in the bank sector's rehabilitation," say Karl and Simon.

Banks worldwide have been rebuilding their balance sheets following substantial credit-related losses. Gartmore's fixed income managers note a marked improvement in investor sentiment and an attendant reawakening of the new issues market. A heavy new supply of investment grade paper has been absorbed readily by investors.

"Banks and other financial institutions were the first victims of the credit crisis and the indications are that they will be the first to emerge. Losses arising from the credit crisis are now being flushed through the financial system."

During this market renaissance, over the past month both Gartmore's bond funds have performed well, with longer dated paper held in the financials sector contributing strongly to performance. The Gartmore High Yield Corporate Bond Fund, in particular, has built upon its strong track record, the Fund ranking in the first quartile of its peer group over 6 months and 1, 2, 3, and 4 years.