While most of his global government bond exposure is through macro strategies, he is bullish on paper from Ireland and Portugal, which he says is the fastest growing economy in Europe right now.
Mr Lanning, who is avoiding EM debt and reducing duration, is now finding renewed interest in absolute return strategies, such as those by Pioneer and remains bullish on convertibles like RWC’s for their additional ‘kicker’ to traditional bond strategies.
But while Mr Woolnough has also brought duration in his corporate bond books down as far as possible, Mr Jones believes shorting too far is not necessarily the solution.
“While we believe that gilt yields will get higher in due course, if interest rates go up you might find that the short-mid term maturities are impacted anyway.
“The longer maturities will be anchored by pension fund demand and the short won’t necessarily protect you in a rising rate environment.”
Sam Shaw is a freelance journalist
Fixed income outlook
Stephen Marsh, European head of fixed income at SEI, says:
“Overall, global growth is improving but below trend economic conditions are likely to persist, meaning interest rates are unlikely to rise any time soon. QE tapering in the US is likely to continue along a gradual path with little pressure to reduce significantly over the short to medium term.
“In spite of this, however, some volatility in fixed income markets are likely to remain as the market over- and under-reacts.”
