InvestmentsMay 15 2023

'Bond investing got too easy so I retired...but now I’m back'

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'Bond investing got too easy so I retired...but now I’m back'
David Roberts, who retired from Liontrust in 2022, is returning to the investment world in a new role at Nedgroup.

When David Roberts retired from the fixed income team at Liontrust in 2022 it was because “bond investing had become too easy”, but he has decided to return and start from scratch at investment firm Nedgroup Investments. 

Roberts exit in 2022 was the culmination of a 33-year career in markets, the last 18 of which was spent working with the same colleagues at Kames and Liontrust. 

After a period spent travelling Roberts is now preparing to launch a new bond fund with former Artemis fund manager Alexandra Ralph at the firm Nedgroup.

Speaking about why he chose to retire, Roberts told FTAdviser: “Central bank policies had made bonds too easy, [having a huge buyer in markets such as a central bank] took a lot of the skill away, and that took a lot of the fun away for the thick end of a decade when quantitative easing was happening.

"Market beta was very low and so it was very hard to achieve alpha which is what clients pay for active managers to achieve. ”

Roberts retirement also coincided with a period of severe falls in bond markets as investors grappled with the implications of quantitative easing coming to an end, and yields rose sharply. 

He said he feels that coming back into such a turbulent market means he can add “value” again for clients.

Roberts said: “In the decade after the financial crisis, governments basically left it to central banks to do the heavy lifting in terms of fixing the economy. But the consequence of that was a lot of inequalities and inefficiencies.

"It meant that bond investors didn’t have to worry too much about it, because central banks would just buy more bonds and that supported prices."

He added: "That meant people didn’t prioritise having a diversified portfolio, and those who did want to achieve extra returns went into the darker corners of the bond market buying subordinated debt or taking currency risk.

"It created a generation of investors who thought central bank support would be there forever, but central banks have raised rates very quickly and sent the message they won’t always be there for markets.”

He thinks the bulk of returns from fixed income over the coming decade will be generated from the coupon on the bonds, as opposed to much of the past decade when the bulk of the returns came from bond prices rising, and yields falling.  

Roberts is coming back to the industry via Nedgroup Investments, a business which he acknowledged is not known for providing funds. Indeed this is the firm's first in-house fund.

He says the key to his return now is that Tom Caddick and Rob Johnson, who also work at the firm, “are people I have known and followed and respected for a couple of decades".

Caddick is a well known industry figure having run fund of fund portfolios at Santander and LV, and was chief investment officer at Santander Asset Management prior to joining Nedbank in the same role in 2021. 

Ralph spent 16 years as a bond fund manager at Artemis, jointly running several funds until her departure in 2021, at the same time as the firm’s head of fixed income, James Foster, retired.

Alex Ralph is a former Artemis bond investor

Roberts told FTAdviser: “Alex is someone I followed and was aware of as a competitor for many years. I was delighted when I got in touch with her about this opportunity and she responded straight away, she had worked with Tom Caddick in the past as well.”

The new fund will be launched in Autumn this year.

Darius McDermott, managing director at Chelsea Financial Services said: “I am surprised to see David return as we thought he has retired. Ralph is someone we have known for many years, she is a good fund manager.”