One of Fidelity Worldwide Investment's portfolio managers says there is value in the corporate bonds of firms such as transport companies and utilities, and investors should avoid undue exposure to financials as global markets turn increasingly volatile.

The comments from Ian Spreadbury, manager of the firm’s Strategic Bond Fund and MoneyBuilder Fund, came on Friday afternoon as global stock and commodity indices tumbled. For example, the FTSE 100 Index of leading UK blue-chip stocks dropped below a psychological 5,000 level; the price of gold, which a few weeks ago had seemingly headed for $2,000 an ounce, traded around 3.9 per cent down on the day, at $1,674 per ounce (around 4pm local time in the UK).

Sentiment towards markets of all kind – including “real assets” such as commodities, soured as doubts remained whether policymakers in the eurozone, US and elsewhere can deal with huge sovereign debt burdens and at the same time, reignite stagnant economies.

Against such a backround, Spreadbury favoured certain types of corporate debt, he said.

“I continue to favour pharmaceuticals, transport, consumer staples and utilities – all sectors that contain companies that have a degree of pricing power in a tough operating environment,” he said in a note.

“I am avoiding over-concentration in financial bonds by limiting my exposure to around 15 per cent. Financials are most sensitive to the problems in Europe and weakening economy. Most importantly, I am ensuring my portfolios are well diversified and flexible, which is vital in this risky environment,” said Spreadbury.

“Comments from the Fed [last] week confirmed the chance of a ‘double-dip’ in developed economies has increased. A lack of real growth is a problem for over-indebted economies that remain reluctant to engage in serious debt restructuring. It means that a decent dose of inflation is required to keep nominal growth above zero and avoid a debt deflation spiral,” he said.

“Quantitative easing can help do this, but comes with a high degree of risk and has not yet proven to be effective at stimulating investment and consumption – the drivers of real growth,” he said.

The Fidelity Strategic Bond Fund has delivered, in sterling terms, returns for the year to date of 3.26 per cent, while three-year returns, on an annualised basis, are 10.57 per cent. The MoneyBuilder Fund, by comparison, has made returns year-to-date of 4.62 per cent, and three-year annualised returns of 9.11 per cent.