This site uses cookies. By continuing to browse the site you are agreeing to our use of cookies. Find out more here.
X
MM+Cover+small+181214
Categories:Investments

M&G shortens bond duration over US easing

  • Print
  • Comment

mike_riddell.jpg

M&G bond fund manager Michael Riddell is preparing for the possibility of further quantitative easing in the US and a resulting bond sell-off by shortening the duration of his funds.

US Federal Reserve chairman Ben Bernanke is due to make a speech at Jackson Hole on Friday at the annual central bank conference and may announce a third round of quantitative easing.

In 2008, the Fed initiated a $1.8trn programme of quantitative easing and in November it issued a second round of QE worth $600bn.

Riddell says he shortened the duration of his bond funds last week amid concerns that more easing in the US will prompt a bond sell-off.

He reduced the M&G international sovereign government bond’s duration from 8.3 years to seven years and reduced the M&G index-linked bond’s duration from one year to six months.

He says: “If Ben Bernanke announces more quantitative easing next week, it will prompt a bond sell-off, so I reduced the position I had, which would have benefited from a bond market rally.”

But Henderson head of fixed income John Pattullo says he thinks the effect of a third round of easing on the bond market is already priced in.

He says: “The markets anticipate easing and hence they buy ahead of it with the flight to quality in the markets. The only way there would be a bond sell-off is if the third round of QE is so large that people become worried about inflation.”

  • Print
  • Comment

Daily Email Updates
If you enjoyed this article, sign up to receive the latest news and analysis from Money Marketing.

The Money Marketing CPD Centre
Build your annual CPD - you can log and plan your CPD hours for free with The Money Marketing CPD Centre.

Money Marketing Awards 2015
Put your firm forward as the leading practitioner in your field. Adviser and Advertising categories are open to entries - Enter Now.

Have your sayEdit my profile/screen name

You must sign in to make a comment

AXA Wealth

Is there a growing need for financial advice


Fund Data

Editor's Pick



Poll

Will providers be forced to pay out compensation over annuity misselling?

Job of the week

Latest jobs

View all jobs

Most recent comments

View more comments