Despite a murkier outlook for global inflation, there could be “positive surprises” ahead which make inflation-linked bonds an attractive diversifier, Fidelity International says.
NN Investment Partners has increased its exposure to peripheral Eurozone government bonds to neutral after anti-EU populists failed to make significant inroads in last week’s Dutch elections.
With the eurozone currently experiencing deflation, inflation-linked bonds are probably not the first thing on the mind of investors. However, as Brent crude is now back at $48, the only way for inflation is probably up. So should investors start thinking about protecting their portfolios against price rises?
Corporate bond funds are strongly back in fashion after a long streak of outflows, as investor confidence inched up in March and the ECB announced the inclusion of corporate bonds in its QE programme. Emerging market debt even witnessed the biggest net monthly inflows in more than two years, according to Morningstar’s latest fund flows data.
Net outflows from European equity funds accelerated in August, while developed bonds are showing an upsurge.
Emerging markets enthusiasm was sky high in Munich when our researcher visited fund selectors in the Bavarian capital last week.
The majority of Swedish fund selectors are keeping their equity allocations unchanged, with one notable exception: emerging markets equities.
Italys fund selectors have been flirting with emerging market debt before, but now seem to be going all the way.
Emerging market bonds and equities continued to enjoy steady net inflows in May, reinforcing a strong trend of renewed investor enthusiasm for emerging markets.
Appetite for emerging market debt has surged in the first half of this year.