The fear of a more sustained market meltdown has prompted Seven Investment Management’s multi-asset team to make its first foray into bonds for nearly two years.
Chris Darbyshire, chief investment officer (CIO) at the group, said investments in inflation-linked US Treasuries had been made across their multi-asset portfolios in what he described as a “risk-reduction move”.
Mr Darbyshire said taking a risk-off stance was not something the team commonly did but he felt equity market levels suggested the need for low-risk assets.
“They have also got a decent real yield in the context of the zero-rate world,” he said.
“We put a chunk of them in our portfolios and the move represents our first foray back into true bonds with proper duration for roughly two years,” he said.
The CIO added the team had “struggled to comprehend” equity market levels since the end of the first quarter when markets perceived that “everything was going swimmingly”.
“We highlighted some weakness in the US but lots of other people are looking through that,” he said.
“At the same time, Asia is weak and although Europe has been strong, we felt it was better to reduce risk for a while.”
