That has big implications for global growth, considering this is the world’s second-largest economy.”
Barbell exercise
Currently, the portfolio has what he calls a “barbell strategy”, with 23% of his holdings comprising AAA-rates securities, a lot of dollars and Australian Government bonds, and “a decent amount of cash to put to work but at a very slow pace”.
The average credit rating of the portfolio is BBB+, having sold much of his B and CCC-rated and high-beta holdings across Europe and the US.
This, Bezalel says, is “simply because of some of the macro risk we see out there. Having said that, we’re not afraid to be aggressive in certain names we own in the portfolio”.
On the lookout for special situations, he favours European telecoms, where he identifies ample scope for ongoing consolidation.
“We’re buying a number of the cable and telecom operators around Europe in anticipation that these guys are going to get bought out by some of their investment grade brothers. It’s typically the high-yield companies we’re buying.”
For this year, Bezalel is targeting a not dissimilar return to last year’s 6-7%, depending on the currency the fund is valued in.
“We have already done a lot of the heavy lifting. I think with the yield that we’re churning out, which is a bit less than 3.5%, plus some capital gains, we can get mid-single digits over this year, which is a nice return – and achievable.”
