Peter geikie-cobb to co-manage portfolio investing in government fixed interest
Paul Thursby is joining Peter Geikie-Cobb at Thames River Capital on 1 August with the pair set to launch a global bond fund in October.
The portfolio will invest only in government paper with an emphasis on G10 countries. Thursby, who ran the Barings Global Bond Trust until November 2002, said the pair would not be tied to a benchmark and would look to produce returns in excess of cash and the gilt market. Currency trading will form an active part of the returns generation strategy.
Geikie-Cobb's plans to join Thames River from Insight were first revealed in the 14 May edition of Investment Mid Week. He had previously worked at Mercury and ran the Baring Global Bond Trust prior to Thursby taking it over in 1994. Both men predict potentially tough times ahead for fixed interest investors.
Thursby believes equity market volatility is due to spill over into fixed interest. He added: 'People seem to think it is something that can be locked away in the equity market but there is a bigger world out there. A bond bubble has quietly built up and some of that volatility is going to shift across.'
He further suggested that too many investment houses have seen fixed interest as a one-way bet and moved increasingly into corporates and down the credit curve. He added: 'It seems to me the concept of bonds used to be about safety and security, whereas today corporate debt seems to be more like equity, especially in a period of low inflation and low growth.'
One reason for this volatility, which Thames River believes will also affect currencies, is the divergent response of central banks and governments to issues now facing them.
Thursby said: 'The US is trying to weaken the dollar and get some inflation back in the system. The Europeans are still trying to kill inflation while the euro continues to rise as people avoid Japan and the US. So there is a difference between markets.'
For Thursby the US attitude, including widening current account and budget deficits, marks a sharp change in direction from the 1990s and back towards the 1980s.
Thursby, who has been on gardening leave since leaving Barings at the end of 2002, said that with a backdrop of volatility in the markets, it was important fund managers were able to work flexibly, something that was easier at a boutique than in a larger investment house.
The major investment markets for Geikie-Cobb and Thursby are the US, eurozone, Japan and the peripheral markets of the UK, Australia, Canada, Denmark and Sweden.
The portfolio is to be run from a global perspective and will not have a large UK weighting built into it.
The Thames River Global Bond Trust will be a sub-fund of the group's existing Dublin Oeic. The portfolio seeks sterling returns and can be accessed via sterling or euro share classes. Thames River is still considering whether to add a dollar share class. The group also has plans to run a long-short version of the portfolio at the end of the year.
An ambitious objective
'Something completely new'
'Illusion of control'
Reasons to be cheerful
Total investment reaches £9m