Loomis Sayles’ fixed income manager Elaine Stokes is snapping up bonds connected to the US housing market and US healthcare as she resorts to focusing on specific bond issues to generate returns.
Ms Stokes, who co-manages the Natixis Loomis Sayles Multi Sector Income fund, a member of the Investment Adviser 100 Club of outperforming funds, said valuations in the bond market were “stretched everywhere”.
She said managers should concentrate on analysing each bond issue closely in order to generate relative value through stock selection. She said there were still some interesting sectors in the market, such as bonds exposed to US housing or healthcare, which can still do well “even in a slow growth environment”.
In addition to allocating money to selected US bonds, Ms Stokes said she was eyeing up emerging market debt, a sector which has suffered a significant fall in value in the past year. Ms Stokes said the “emerging market space is getting more interesting” but she claimed that she didn’t think it was time to go “all in” on the sector and she was buying certain individual issues.
Since launch in August last year, the fund has lost 2.7 per cent compared with an average fund return of 1.6 per cent from the IMA Global Bonds sector.