Fremont Investment Advisors, a San Francisco money management fund, has raised some $8.5 million in cash which it plans to invest in euro-denominated corporate debt and 30-year TIPS. Sandie Kinchen, portfolio manager of about $125 million, says she is waiting for the euro to stabilize before she invests. She says there is no particular level that would trigger a move, merely that it would have to stop declining in value. Companies she likes include Deutsche Bahn Finance, which she notes is a stable, old-economy credit. The moves will come out of the firm's $85 million global fund, which, at a 5.34 duration, is short the 5.87 year J.P. Morgan Government Bond Index.
Kinchen sold TIPS of '07 within the last month, because she already owns the '09s. She will add $2-3 million in TIPS of '29 in a move to increase duration and consolidate her TIPS exposure.
The global fund allocation includes 27% in European sovereigns, 24% in high grade U.S. and European corporates, 15% in U.S. Treasuries, 12% in TIPS, 12% in emerging markets, 7% in cash and 3% in Ginnie Maes.