Carne tempers exposure to fixed income

Paul Carne, who manages F&C's range of four Lifestyle funds, has continued to temper his exposure to cash and fixed income across the range in the last week as part of an ongoing process to increase exposure to equities.

"Whilst we still see attractions in credit from an income perspective, bond yields have little scope for further contraction and we currently feel that equity markets offer greater scope for upside," said Carne. "This tactical shift was implemented through investing some of the cash allocation in the Defensive and Cautious portfolios and trimming the positions in M&G Strategic Bond and Invesco Perpetual Corporate Bond across the range."

The move follows a decision to sell out of Neil Woodford's Invesco Perpetual High Income Fund across the Lifestyle range last month, with Carne believing that Woodford's "relatively defensive stance is at odds with our more upbeat assessment on the outlook from here at present". The bulk of the proceeds from this trade were used to invest in Artemis Income, a fund which boasts one of the finest and most consistent track records in the highly competitive UK equity income sector.

Carne added further to his UK equity exposure in both portfolios through new positions in the F&C FTSE All-Share Tracker - a fund that enables investors to participate in the broader gains he expects UK equities to make. As an 'in-house' offering, Carne has been able to access this fund at a cost that compares favourably with other index-orientated investments, such as exchange-traded funds. Positions stand at 0.55% and 1.03% for the Defensive and Cautious portfolios respectively.

In the Balanced and Growth Funds, meanwhile, Carne took the decision to move property exposure back in-line with the benchmark, from being underweight, through the purchase of a 2012 dated Property Index Certificate, an addition to an existing holding in the Balanced portfolio and a new position for Lifestyle Growth. These transactions were funded from inflows and stand at 2.97% and 0.53% respectively.

"We are currently underweight bonds and cash across the portfolios by around 3% and overweight by around 3% in equities. Within this we are neutral in Europe, Asia and Emerging Markets, underweight US equities and overweight UK and Japan as this is where we see the most value," Carne concluded.