Fixed income presents a wealth of opportunities for investors
Fixed Income currently presents investors with an outstanding choice of good quality funds, with the Strategic Bond sector in particular offering a goldmine of opportunity, say Fidelity's Fund Manager Selection Team, as they unveil the 1st review of Fidelity's Select List.
Launched in February 2010 for self-directed investors, the Select List is a shortlist of what Fidelity's Fund Manager Selection Team believe to be good core funds for mid to long term investment, chosen from the 1100 funds on Fidelity's platform FundsNetworkTM. No payment is received from fund providers to get on the list - the funds are included purely on their own merits. The Select list is reviewed on a quarterly basis.
The latest line-up has seen the addition of nine new funds - seven of which fall within Fixed Income sectors; one within US equities; and one in European Equities. The new Funds include: GLG Global Corporate Bond Fund, JPM Strategic Bond Fund and Fidelity Strategic Bond Fund, as well as funds outside of the fixed income sector ssuch as Blackrock US Opportunities Fund. The UK Equities category remains the largest single category on the Select List with a total of 13 funds, while together the various Fixed Income categories account for over 20 funds.
Schroder Income Fund has been removed from the Select List this quarter, following the announced departure of Ian Lance and Nick Purves, two of Schroder Value team's four portfolio managers. This action has been taken due to concerns about the immediate capacity of the two remaining fund managers in taking on the Income Fund and the various versions of it alongside their existing responsibilities. The fund will be kept under review.
Fidelity's Fund Manager Selection Team give their thoughts on the current line-up in the Select List:
Eugene Philalithis, Portfolio Manager at Fidelity International said: "I am currently seeing very interesting opportunities within credit markets, with investment grade credit spreads still offering adequate compensation for default risks. While 2009 was an exceptional year for corporate bond returns, 2010 returns are expected to be more modest. However, we still expect corporate bonds to outperform government bonds. For those investors wishing to look further afield, global bonds offer an opportunity for diversification and extra returns across government and corporate bonds.
"More specifically, strategic bond funds in particular are growing in popularity and the quality of these funds at present is underlined in two of my latest additions to the Select List - the JPM Strategic Bond Fund and Fidelity Strategic Bond Fund. This sector offers something for everyone - broadly managed funds for investors who prefer to leave the fund management to a professional, as well as for those investors who want to manage their own bond asset allocation. The Strategic Bond sector is a goldmine of opportunity."
Ayesha Akbar, Portfolio Manager at Fidelity International said: "The addition of the Blackrock US Opportunities Fund to the Select List, reflects our view that there is still reason to remain positive on US equities, even after the significant recovery of the past year.
"Valuations are still reasonable versus historical measures like recovery earnings and cash flow. Furthermore earnings are likely to recover strongly from here and may continue to surprise against expectations. The US category in the Select List provides investors with a choice of funds segmented by style and size, giving investors diversified exposure to US markets."
Steve Gibson, Portfolio Manager at Fidelity International said: "UK equities are the backbone of many UK investors' portfolios, and for this reason the UK is the largest category within the Select List, with 17 of the total 78 falling into the UK Equity and Equity Income categories, all of which have been on the list since launch.
"The UK equity funds included in the Select List give a wide range of different types of investment, including those aimed at investing for income or those interested in small cap investments"