City Financial has announced the relaunch of its Strategic Global Bond Fund with a new manager and a different management style.

The London-based investment firm has named Graham Glass (pictured), who currently works for Argyll Investment Services, as lead manager on the fund, replacing Mark Astley of Millennium Global Investments.

The fund, which previously invested in sovereign debt only, has shifted its management style to also provide exposure to corporate bonds.

Glass’ new ‘blended’ approach to asset allocation will use the Barclays Capital Global Aggregate Total Return Index as a benchmark for the fund, hedged to sterling.

Under Glass’ management, the fund’s exposure to government debt will be reduced to 20 per cent, from the current weighting of more than 50 per cent.

He commented, ‘The fund is well-positioned to capitalise on the last three years’ extraordinary volatility in credit markets which has left many bonds pricing in default rates that are quite simply irrational.

‘When one considers that investment grade corporate debt is pricing in one in every seven companies to go bankrupt in the next five years, one can see the potential value in today’s corporate bond market.’

Glass continued, ‘Even in the depths of a prolonged recession, the average five-year default rate only ever climbed to 1.55 per cent in 1938, as measured by Moody’s.

‘This is one of the reasons for the switch from a plain vanilla government bond fund into one where credit features strongly.’

Glass previously managed €30 billion (£24.8 billion) of fixed income assets at Italian insurance company Assicurazioni Generali.

He has also been part of a team that managed credit exposure within the €350 billion (£289.2 billion) public pension fund of Norway while at the asset management arm of the country’s central bank.