Making the right macro calls is key to investment returns in the current economic environment, says Ariel Bezalel, Fund Manager of the top-performing Jupiter Strategic Bond Fund. In Ariel's view, the global economic situation is precarious and he sees the best potential in bonds issued by governments running strong economies such as Australia and Canada. He has also reduced high yield exposure to the lowest for some time preferring a more defensive stance.

"There are a number of risk factors affecting market sentiment at the moment - sovereign risk in Europe is here to stay, the US has no coherent strategy to reduce its deficit, the problems in the Middle East will create instability for a long time to come and economic growth is stagnant everywhere except the emerging economies, which require a premium return to justify the extra risk." Ariel explains: "If you also consider that quantitative easing is coming to an end on June 30th, we are likely to see more volatility in risk assets in general."

Ariel, who has been managing the Jupiter Strategic Bond Fund since its launch in June 2008, has delivered top decile returns over this period, with a return of 46.21% compared to an average sector return of 19.94%. This ranks the Fund 2nd out of 56 funds in the IMA Sterling Strategic Bond sector and compares against an IBOXX Sterling Non-Gilts All Maturities index return of 23.69%, an outperformance of 22.52%.*

Ariel continued: "Areas of the market such as emerging market debt have been popular recently, but I believe there are better opportunities to be found in developed markets, particularly as it is preferable to access emerging markets through Western companies. The ongoing Sino-Forest saga is a good example of why emerging markets investing can sometimes be a risky bet."

"The rig-financing sector continues to be a favourite of ours. In our view, it offers real value for money, with yields of around 8%. Oil rigs are typically leased out on long-term contracts to the oil majors. The bonds have strong covenant packages with claims on rigs in the event of default and some have loan to value ratios of only 60%-70%. This part of the market has been a material contributor to the strong performance we have enjoyed so far this year."

The Jupiter Strategic Bond Fund has a flexible remit which allows the manager to invest across the geographical and credit spectrum, in corporate or government bonds, and in any sector. Over the three year period since launch, the Fund's returns have been driven by investments in a number of bank bonds including Commerzbank, Lloyds and Barclays. More recently, the fund manager took advantage of strong markets to invest in companies such as Alcatel through the convertibles which resulted in a gain of around 33% over a short period due to an unexpectedly strong set of results.

Ariel concludes: "Having benefited from equity market strength at the beginning of the year, we now believe the time is right for a more cautious approach. Our largest position is in Australian government debt and our second is in Canadian government debt (currency hedged). We believe both positions are a sensible hedge to a growth shock in the global economy. We have also been reducing high yield bonds and although the Fund still has 50% exposure to this area, it is of a more conservative nature, with a preference for defensive sectors and secured bonds."

- ENDS -

* Source: Financial Express. Date range: 02.06.2008 to 02.06.2011

FUND FACTS
. UK authorised unit trust, classified as UCITS
. Launch date: 2 June 2008
. Managed by Ariel Bezalel
. Benchmarked against IBOXX Non Gilts All Maturities Index
. Fees: 4% initial and 1.25% annual management charge
. Sector: IMA Sterling Strategic Bond
. Minimum investment: Lump sum = £500, Monthly saving = £50
. Sterling denominated

ARIEL BEZALEL BIOGRAPHY
. Joined Jupiter in 1998
. Over 13 years experience in credit markets.
. Manager of fixed interest components of Jupiter Monthly Income Fund and Jupiter High Income Fund

Jupiter Unit Trust Managers Limited (JUTM) and Jupiter Asset Management (JAM) are both authorised and regulated by the Financial Services Authority and their registered address is Grosvenor Place, London SW1X 7JJ. They are both subsidiaries of Jupiter Investment Management Group Limited and the group is collectively known as "Jupiter. The above commentary represents the views of the Fund Manager at the time of preparation and may be subject to change and this is particularly likely during periods of rapidly changing market circumstances. Their views are not necessarily those of Jupiter and should not be interpreted as investment advice. Every effort is made to ensure the accuracy of any information provided but no assurances or warranties are given.