JPMorgan Asset Management’s Nick Gartside has loaded up on peripheral European bonds, having spotted a “virtuous circle” for the asset class.
The strategic bond manager has boosted both government and corporate debt from peripheral European countries, in spite of a strong rally in those bonds already.
Fixed income is in a period of alteration, according to Mr Gartside. He said the major questions for bond portfolio holders are: when will interest rates move and what will that mean for their bond portfolio?
Mr Gartside, who is the lead manager of the £568.8m JPM Strategic Bond fund, said: “Last year was the worst year for the bond markets since 1994.”
He added that most bond investors and managers had expected developed market government bonds to move higher this year, only to be disappointed.
With the prospect of an imminent rise in interest rates, some fixed-income managers are looking beyond government bonds and hunting for new areas of the market.
Mr Gartside said improving fundamentals are enabling countries on Europe’s periphery to issue debt, which then improves government finance and leads to further successful debt issuance.
In his view, a similar positive feedback loop is making its way into the financial and corporate space as well, providing possible investment choices.
