Hambidge (pictured) says there is little value left in corporate bonds and that he now has his lowest weighting to the asset class in 15 years of management. He says he has no inclination to change his view on the asset class in light of short-term rumblings about a return to the eurozone crisis, following Italian election results, and the UK downgrade, which have jolted the markets.
"Fundamentally we still prefer equities to bonds whatever the short-term noise," he said.
"We do not ping our assets around. We make small incremental moves. Recently we have been reducing our equity exposure slightly at the margin into this rally."
"We know markets do not go up in a straight line and they have done that since Draghi’s speech last year, so we are due a pull-back at some point. If we get a significant pullback we will add funds into that weakness."
"We do not chase our tails and that has worked for us over many, many years."
With regard to income, Hambidge says that the question remains the same whatever markets are doing: "Are you buying into a robust income stream at an attractive price? If so, the capital value will look after itself."
"You can still make a good case for corporate bonds and they do have slow growth and low default rates."
"Interest rates will be low for a long, long time and I think if we were to have this conversation in three years’ time I would still be saying the same."
"So they could easily form part of a portfolio, and I do have some [exposure], although my weighting has never been lower in 15 years of doing this."
Hambidge says that although he still likes the "stodgy" UK Equity Income sector for the bulk of his portfolio, there are some more obscure portfolios he is using to diversify his income stream.
Starwood European Real Estate Finance
Starwood European is a recently launched investment trust that finances real estate projects.
Hambidge holds positions in both this portfolio and Longbow UK Real Estate Debt Investment.
"I expect them to be medium- to long-term positions in our funds. It’s a theme we are very keen on," he said.
"We like real estate debt, that’s an area that could run and run. The funds are taking advantage of the funding gap left by the withdrawal of the banks."
Performance of trust vs sector since launch
Source: FE Analytics
As the fund was launched in December 2012, data is scarce, but it could be one to watch; that Hambidge is not the only investor to see value in the sector is demonstrated by the fact that it is already trading on a premium of 7.2 per cent.
Aberforth UK Small Companies / PFS Chelverton UK Equity Income
"We find some good alternative income plays in the smaller companies sector. The two we own are Aberforth and Chelverton. They invest in the bottom 10 per cent of the stock market," Hambidge continued.
"I don’t think overall risk is higher with smaller caps, but liquidity risk is a concern. A lot of these companies have been around for decades and have a strong dividend culture, so we are happy to have at the margin exposure to areas like smaller companies."
PFS Chelverton UK Equity Income is currently yielding 4.8 per cent, according to data from FE Analytics, while Aberforth UK Small Companies is yielding 2.88 per cent.
Prusik Asian Equity Income
"We are getting good income from Asia. We are more nervous about volatility in income but as a diversifier Asia has been good for us," Hambidge said.
The manager holds Prusik Asian Equity Income, a $465m fund domiciled in Ireland.
It has heavy exposure to China, Korea and Thailand.
Unlike many Asian equity income funds – in particular those found in the IMA sectors – the fund has little exposure to Australia's income-payers.
This means it is profiting more specifically from Asian growth rather than the resource-rich, western Australia.
Since launch in late 2010, the fund has made 51.49 per cent while its benchmark index has made 10.97 per cent, according to data from FE Analytics. It has a prospective yield of 5 per cent.
Performance of fund vs benchmark since launch
Source: FE Analytics
Jupiter Japan Income
"We have had marginal exposure to Japan. It has been the highest-yielding developed market but in real terms yields only around 3 per cent because of currency movements," Hambidge said.
The manager holds Jupiter Japan Income, a £525m portfolio currently yielding 2.4 per cent.
Simon Somerville’s portfolio has performed roughly in line with the sector over three years, returning 12.36 per cent, but edges ahead over five, with returns of 26.39 per cent to the sector’s 19.64 per cent.
Hambidge heads six funds in the mixed-asset sectors; three of the four with a three-year track record are top-quartile over that time and five of the six are top quartile over one year.
Premier Multi Asset Distribution is the largest, at £132m, and has five FE Crowns, as does Premier Multi Asset Monthly Income.
Both sit in the IMA Mixed Investment 20%-60% Shares sector, and both are top quartile over the past three years.
Premier Multi Asset Monthly Income has marginally outperformed over this time, according to our data, having made 30.62 per cent.
Performance of funds vs sector over 3yrs
Source: FE Analytics
Both funds have a top quartile yield for the sector, the Distribution fund yielding 4.22 per cent and the Monthly Income fund 5.1 per cent.
Hambidge says that his success has come through a disciplined approach to buying when assets are cheap and selling when they are expensive, requiring him to look past short-term rallies and pullbacks.
"When you see a screen in deep red it’s emotionally harder to buy but you need to remind yourself it is rationally the right thing to do," he said.
"My own view is that mistakes are made by trying to do all things for all investors, trying to get all the upside and protect against the downside at the same time. In theory that’s great, but it doesn’t work in reality."
Premier Multi Asset Distribution requires a minimum investment of £1,000 and has a TER of 2.25 per cent.