Posted inFRENELUX

Dutch fund buyers brace themselves for bond market crash

Almost three quarter of delegates use long/short strategies in the fixed income space, considerably more than the European average. Of those who have an allocation to the asset class, an overwhelming majority want to increase their exposure.

One might expect that the disillusionary mood towards bonds might feel like a cold shower for the long-only bond manager in the room, Andrew Wilmont, who leads a European high yield bond fund for Neuberger Berman.

But, while recognising most bonds are overvalued, he took a different angle. “Yields are at record lows now, but maybe the question should be whether bond markets can become more overvalued,” he argued. “I think we are on a tipping point now, and yields will be lower for longer.”

 

 

The bond paradox

Fabrizio Quirighetti (pictured right), head of multi-asset at Syz Asset Management in Geneva,

shared an interesting observation with the audience. “A lot of people believe there is a big bubble in the bond market. However, I don’t see any big euphoria of people desperate to buy government bonds,” he said. “So I think the bond market is still a rather safe place to be these days.”

According to Quirighetti, investor behaviour has also radically changed over the past couple of years, with bonds and equities swapping roles. “People are now buying [dividend] equities for the coupon, while they look for price appreciation in the bond. They do not go for the coupon,” he said. 

Click here to see a full breakdown of the delegate voting results from Expert Investor Netherlands.

And click here to see a slideshow of photos taken during the event.

 

And click here to see a slideshow of photos taken during the event.

Part of the Bonhill Group.