Why Albert E Sharp has lost faith in strat bonds

Among other things, they've decided to call time on their holdings in Artemis Strategic Bond and Artemis Target Return Bond (which has recently been renamed Artemis Short-Duration Strategic Bond) on the basis the Artemis house view has grown increasingly divergent from their own. 

Head of MPS James Crocker said the team was moving away from strategic bonds entirely as they feel they can make duration calls themselves instead of outsourcing to managers. 

“We often say, 'is it really right for us to call the difference between whether or not you should be in US Tips or emerging market hard currency debt?'. Surely your man on the street should be making those calls. Well, I'm not entirely sure that's always the case.”

In addition, he’s cut exposure to Allianz Gilt Yield as he sees greater appeal in higher-yielding assets and less in long-duration bonds.

Crocker admitted that they shouldn't have been in bonds full stop, given the interest-rate rising environment of the last couple of years. 

And over on the equity side, they have replaced Lindsell Train Japan with Zennor Japan Equity Income. 

“The one thing that we really liked about Zennor is that when we look for a manager, we want a combination of people who are fearless, who are motivated, who are obsessed, who aren't doing it for the money,” he said. 

“We're big, big fans of Terry Smith, and Terry Smith does not need the money but he's going to do this until he drops. Well that's what we're looking for. And that's the same with the Zennor guys – they are doing this until they lose interest.”