Gartmore Investment Management, which manages £1.5 billion in sterling- denominated corporate bonds, is seeking to increase its allocation to telecom names and high-yield bonds. Paul Grainger, fund manager for the firm's sterling corporate bond fund in London, says Gartmore has been adding selectively to telecoms and will continue to buy on weakness and volatility. In addition, he will buy high-yield sterling bonds on a name-by-name basis.
Grainger declined to name the specific telecoms he has been buying, but says he is focused on those restructuring their balance sheets and selling off non-core assets. He expects to see more tightening in the sector, but says headline risk will cause volatility. It is during periods of weakness and volatility that he plans to add more bonds. Currently, Gartmore is overweight telecoms versus its benchmark--the Merrill Lynch sterling non-gilt index--by a few percentage points.
Elsewhere, Grainger is looking for value in different levels of financial debt. Also, he believes there may be some opportunities in auto paper where spreads have been wide and volatile. The securitization market is also on his list, because asset-backeds offer a save haven. In the past he has bought commercial mortgage-backed paper and pub deals.
