Old Mutual Corporate Bond Class A Acc

Christine Johnson has been appointed manager of the Old Mutual Corporate Bond Fund on a permanent basis. She was appointed interim manager in April 2011 following the departure of Stephen Snowden. She joined Old Mutual in September 2010 and also manages the Old Mutual Dynamic Bond Fund.

Since she took over, Christine Johnson has made a number of changes. Historically the fund was managed with an emphasis on stock selection, whereas Christine Johnson will aim to balance her analysis of individual bonds with her views on the wider economic environment. During 2011 she was concerned about the global economic backdrop, particularly in Europe. She therefore held no bonds issued by banks or corporations in peripheral Europe. She also purged the portfolio of all bonds she felt could be illiquid, i.e. difficult to sell in a volatile environment.

The fund's exposure to gilts (UK government bonds) was increased and currently stands at around 15%. This was an astute call on the part of Christine Johnson; gilts performed well last year as many investors perceived them as a safe haven from the euro zone's woes. She also increased exposure to higher quality investment-grade bonds, which, including gilts, account for around 95% of the portfolio. Investment-grade bonds are those issued by companies considered to be financially secure and as a result are considered lower risk. She is also finding attractive yields among certain financial and insurance companies. The fund currently yields 4.4% (variable and not guaranteed). She also has the flexibility to invest up to 20% of the portfolio in high-yield bonds and can also use derivatives, both of which can add risk.

Looking ahead, Christine Johnson remains alert to the probability of continued volatility, with brief rallies followed by periods of risk aversion. She will continue to be flexible, taking profits when positions have done well and cutting exposure quickly when markets fall. Overall she remains cautious and hopes these tactics will help reduce the fund's volatility.

We have been impressed with Christine Johnson's performance so far, and the changes made to the portfolio have on balance been successful. Please remember this is only a short time period, past performance is not a guide to the future and any investment can fall in value as well as rise. We will be meeting with Christine Johnson in due course to discuss the fund in further detail. In the meantime we feel existing investors should continue to hold the fund if it still meets their objectives, though it is not currently on the Wealth 150 list of our favourite funds in each sector.