However, an even larger group of fund selectors does not invest in the asset class at all. Only in Sweden the non-invested are more numerous.true
The relatively high proportion of government bond buyers might be explained by the fact that Norway’s fund selectors predominantly invest in Norwegian government bonds. Norwegian government bond yields are significantly higher than those of the Eurozone’s core countries, with 10-year bond yields currently slightly above 2%.
All above average
Corporate bonds enjoy a similar relative popularity. More than a quarter of Norway’s fund selectors intend to increase allocation, compared to a Pan-European average of only 7%. Still, sentiment is net negative with 33% planning to decrease exposure.
High yield bonds are not particularly in fashion in Europe now, although its popularity might rise again on the back of widening spreads and a slight re-rating of the asset class observed over the past weeks. However, high yield is more popular in Norway than anywhere else in Europe, just like the other developed market fixed income asset classes. More than a quarter of our sample said they will increase allocation, compared to a Pan-European average of only 11%. Still, 40% will decrease allocation.
Enthused retail investors
While fixed income is remarkably popular with Norwegian fund selectors compared to their European peers, their enthusiasm doesn’t even come close to that of Norwegian retail investors. According to the Verdipapirfondenes Forening (VFF), the Norwegian association of asset managers which registers fund flows recorded by Norway-based asset managers, retail investors in the country withdrew a net NOK3.4bn (€305mln) from equity funds so far this year, while they invested a net NOK2.6bn in bond funds and another NOK2.8bn in mixed funds.