Fixed income managers pile into government debt

Ian Spreadbury, manager of the £1.5bn Fidelity Strategic Bond fund, said investors might be tempted back to the high-yield market as they searched for yield, but he acknowledged the tendency towards safe-haven assets was not likely to end soon.

He said there might be some opportunities in high yield for him, but only “where we feel we are being sufficiently compensated for default risk and illiquidity”.

Brookes: government bonds ‘do not represent any value’

Schroders’ head of multi-manager, Marcus Brookes, has declared government bonds “do not represent any value”, in spite of that call costing him dearly in 2014.

Mr Brookes’s Schroder Diversity range of multi-manager funds all languished in the bottom quartile of their respective sectors last year, a result he attributed to the lack of fixed income in the funds.

He said he had thought the bonds offered no value in 2014, but that had “turned out to be wrong” as UK and US government bonds delivered double-digit returns.

However, he has stuck to his convictions this year, refusing to cave in and invest in the safe-haven assets.

He acknowledged the call could end up being wrong again but said the best-case scenario for government bond returns in 2015 was “4 per cent”, but the potential loss was “about 25 per cent”.