 |
| Gary Sullivan |
Frankfurt-based DWS Investments is putting cash to work in lower-rated high-yield bonds that are less sensitive to interest rates, in anticipation of interest rates rising and credit default rates trending down. Gary Sullivan, portfolio manager for DWS's E1.35 billion in European high-yield, is 7% overweight single-Bs and selectively long triple-Cs, which constitute a 5 1/2% out-of-index investment.
On the flip-side, he is 15% underweight the more interest-rate sensitive double-Bs and fallen angels, many of which are moving back toward investment grade. The fund is largely benchmarked against the Merrill Lynch Euro high-yield double-B to single-B constrained index, which has 36% in double-Bs and 64% in single-Bs.
Sullivan's bottom-up bond selection results in a 3% overweight each in basic industries and capital goods names. He is also overweight chemicals, where he sees Cognis and Celanese as attractive investments. The fund manager is overall neutral the index in media and cable names, but has an overweight in Telenet and an out-of-index bet on Cablecom and Independent News and Media, while being neutral Kabel Deutschland and underweight NTL. Overall he is steering clear of bonds of technology and telecommunications companies.
