Raj Manon is Marlborough’s head of investments. He joined the company more than two decades ago as an investment analyst. Before this he held a sales role at Alliance & Leicester.
Which fund in your portfolios are you most pleased with?
Man GLG Sterling Corporate Bond, managed by Jonathan Golan and the team, is one of the funds we’re very pleased with.
The team seeks out undervalued bonds and is prepared to take high-conviction positions when they identify what they believe to be compelling opportunities.
The approach has delivered for investors, with the fund outperforming in both rising and falling markets.
Which was your worst asset allocation call and what did you learn from it?
We reduced our exposure to high-yield bonds in the final quarter of 2023, which was too early.
The additional yield on high-yield bonds compared to government and investment grade bonds was at historically tight levels at the time.
We expected increased company defaults to push up yields, hitting high-yield bond prices. However, demand for high yield debt remained strong and the market proved more resilient than we expected.
Moving forward, we’ll be more vigilant about broader market dynamics.
Right now, China or India?
We see more potential upside in China. Its economy is showing signs of recovery, despite challenges around real estate and debt.
Valuations remain low, suggesting that global investors may be underestimating the market’s potential.
India’s long-term prospects remain strong, but the country’s equity market has already experienced significant gains, so future returns may be more muted.
What macro issue is having the biggest impact on your portfolios? How are you addressing it?
One of the biggest macro issues for our portfolios is the shifting interest rate environment.
More rate cuts are on the horizon, but inflation concerns and geopolitical uncertainty are fuelling volatility.
To navigate this, we are increasing duration, although our approach is selective.
One area where we see an attractive opportunity is longer-duration positions in gilts. In corporate bonds, we’re continuing to focus on high-quality issuers, where yields remain compelling.
Best source of uncorrelated returns?
We see infrastructure as one of the most attractive sources of uncorrelated returns.
Utility companies, airports and toll roads typically benefit from stable cash flows, long-term contracts and strong barriers to entry, which can help to provide resilience during market volatility.
Since infrastructure is less influenced by traditional market cycles and tends to perform well during periods of economic stress, it can play a valuable role in a diversified portfolio.
How are you keeping costs down?
We are committed to keeping costs down for our clients and charges are a factor in our fund selection process.
We use our scale to negotiate access to cheaper share classes on behalf of our investors. In addition, we are careful about paying for active management.
We will select an active manager when we believe there is an opportunity to add alpha. Otherwise, we will use a lower-cost passive option.
What do you think is your most interesting tactical call at the moment?
We see a compelling opportunity in gilts. Current yields are appealing and further interest rate cuts are likely to be positive for gilt prices.
In addition, current pricing should offer some protection if volatility increases.
Is there an asset class you are currently on the fence about (buying or selling)?
It’s fair to say we’re on the fence about Japanese equities. Our overweight position last year worked well for us, and we subsequently reduced it.
Now, valuations appear relatively attractive compared to other developed markets. However, recent performance has been somewhat mixed, with the market lagging behind other regions.
We are also concerned about the impact of currency moves. That said, Japan’s economic reforms and corporate governance improvements suggest potential upside.
We are monitoring the situation closely before taking a more decisive stance.
What’s your hottest investment take?
The immense potential of artificial intelligence. With advances in machine learning, automation and data analytics, AI is transforming industries across the board — from healthcare and finance to manufacturing and transportation.
We are now seeing the most attractive opportunities moving from companies providing the technology and software (the enablers) to businesses using AI to transform their business operations (the adopters).