Fund of the week: The lone fund manager who's bullish on bonds

Chris Burvill, 50, hasn't always been bearish. "But I've seen very little over the past three years to make me think otherwise", says the manager of the Gartmore Cautious Managed Fund. Firms were loaded with too much borrowing and debt-fuelled economic growth looked unsustainable to him even as far back as 2006. So he cut his exposure to equities and moved some money into gilts. It worked over the past five years, the fund is up 26% against a 3% drop for the FTSE 100.

Unlike most fund managers, Burvill doesn't have a raft of analysts at his disposal. He prefers "to manage the fund primarily on his own", says Morningstar, drawing on conversations with long-term broker and economist contacts to make his decisions. Up to 60% of the fund can be held in equities, but currently it's just 37%, reflecting his continued bearishness.

The few stocks he does hold are defensive blue chips, such as Vodafone and GlaxoSmithKline, which haven't risen in the current "bear market rally", as he puts it. Fixed-interest securities (corporate debt and gilts) account for 55% of the portfolio, and cash for the remaining 8%.

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Burvill is bullish on index-linked bonds, as he believes government policy will lead to a renewed bout of inflation. And he thinks we are only half way into the recovery for corporate debt.

Although he has taken profits on some corporate bonds, "there are still plenty of BBB, investment-grade bonds yielding between 9% and 11%", he says their higher "fair value" suggests the yield should be 7%-9%. "So there's still plenty to go for, although things aren't as exciting as earlier in the year."

Contact: 0800-289336.

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Gartmore Cautious Managed Fund top ten holdings