By Leo Bland Hugh Everitt is to leave Morley Fund Management, CGU's investment arm, in the spring le...
By Leo Bland
Hugh Everitt is to leave Morley Fund Management, CGU's investment arm, in the spring leaving the Monthly Income Plus and Preference Share funds that he runs to be taken over by Mark Gull.
Everitt has been running CGU Monthly Income Plus since 1989 and Preference Share since 1990. Gull joined Morley from Gartmore last year. Everitt also runs the CU PP Monthly Income fund, an offshore corporate bond fund based in Luxembourg, which will also be taken over by Gull.
Gull is currently deputy head of non-government bonds at Morley and will be given the title head of corporate bond unit trusts and high yield when Everitt leaves the group. The role will include responsibility for high yield corporate bonds as well as the development of high yield investment trust products. Anne Robson, currently a corporate bond fund manager, also becomes head of investment grade corporate bonds.
Gull said the Monthly Income Plus fund currently has around 65% in corporate bonds, 20% in preference shares, 4% in convertibles, 8% in investment trusts with around 3% in cash. Monthly Income Plus currently offers an income of 7.2% after charges.
Gull said he will not be looking to change the way Monthly Income Plus is run and will continue to look for a well diversified portfolio. He added: "The most important area for the fund is corporate bonds. We felt that last year was a poor one for the asset class in terms of overall performance but in 1998 there were returns of 20% plus and the market got ahead of itself.
"We are back to sensible levels now. Interest rates are rising but this is being priced in. We have got rises in interest rates of up to 0.75% priced in over the next three to four months. Corporate bonds relative to gilts look attractive, the valuations are still attractive on an historical basis.
"The demand for income will remain very high from the retail side and the institutions will become more interested in corporate bonds as well. There is a possibility that corporate bonds may be allowed to be used for meeting the Minimum Funding Requirement, for which only gilts can be used at the moment."
Gull added that the vast majority of the Monthly Income Plus fund is invested in investment grade stock or equivalent ratings for assets such as preference shares. Monthly Income Plus has an frAA rating and is seventh out of 59 funds in the UK General Bonds sector over three years on growth of 38.2%. CGU Preference Share also has an frAA rating and is fourth out of 59 funds in the UK General Bonds sector over three years on growth of 41.1%.
Everitt is departing Morley to join an investment boutique.
All-day event on 24 April
Consequences could be more severe than in stress tests
AFH has six segregated mandate funds
Variable operating expenses