Leading bond fund managers have reassured investors that their direct Irish exposure is small.
Henderson’s £970m strategic bond manager John Patt-ullo says he has no material exposure to Allied Irish Bank and Bank of Ireland, which are the most likely companies to feature in bond funds. He says many other Irish bond issuers should not be affected by government debt. He says: “They happen to be located in Ireland.”
F&C’s Fatima Luis, who co-manages £443m of bond fund assets with Rebecca Seabrook, says her maximum income bond fund holds less than 0.5 per cent in AIB.
Luis says: “Funds are diversified – AIB is such a small part of our fund. You are going to see volatility in risk assets generally but as long as their fund is diversified, investors should hold on.”
Aviva Investors’ £45m highyield bond fund manager Andrew Lake says: “We have a little bit of AIB but not much. The overall high-yield index has been quite orderly so far. The market is probably better able to deal with this now than it was in May.”
Irish 10-year government bonds are trading at yields 5.75 per cent higher than equivalent German bonds.