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BlackRock’s Thiel points to opportunities for fixed income investors

BlackRock head of European fixed income Scott Thiel believes that quantitative easing will offer a dual benefit to fixed income investors.

Thiel says that the move has prompted further dislocation in volatile markets, giving active managers a number of opportunities.

He says: “Over the last two weeks, we saw price swings of 100 basis points in UK Government bonds; a few years ago, a move of 20-25 basis points would have been considered significant.”

Thiel says investors who already hold gilts will benefit from rising prices and may want to lock in profits by switching into corporate bonds or overseas sovereign debt.

He says: “With monetary policy directed at reducing the rate of corporate defaults and bankruptcies, corporate debt is becoming a less risky investment. But we think there is still value in UK Government debt. In these days of high volatility and low savings rates, a Government bond yielding 3.64% remains an attractive proposition.”

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