Citywire + rated Zerah told Citywire Deutschland that he made the duration move due to improved macroeconomics and decreased political risk but with one eye on the European Central Bank winding down its purchase programme.
‘We are generally in a good economic position with regards to Europe’s outlook, so it is realistic that the ECB would begin tapering at a relatively slow pace soon,’ he said.
‘So, we have moved from small long positions in German, UK and Swiss government bonds to a short position.’
According to company data, the bulk of Zerah's liquid positions are comprised of bonds with a maturity of less than one year and T-bills.
Zerah said he is therefore moving the fund to defend against a rising rates scenario. This has seen duration reduced from around eight years at the start of 2016 to sit at two years currently.
Elsewhere, Zerah said, while he has ramped up his cash-like positions, he has found limited attractive investment ideas in the emerging markets.
‘There are currently only very selective alternatives in the emerging markets. We don’t want to do things by half, so we are waiting for the proper opportunities to arise. This means we can avoid investments that increase volatility in the fund.’
On a three-year basis, the Carmignac Pfl Global Bond fund returned 21.8% in euro terms. This compares to a 20.8% rise by its Citywire-assigned benchmark, the JP Morgan Global GBI Unhedged TR, over the same period to the end of May 2017.
This article was updated on June 20 to reflect the use of 'cash-like' liquid positions rather than just cash.