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Manager focus: Paul Read

Bond markets are never likely to return to the liquidity levels seen in 2005, according to Paul Read, the co-head of fixed income at Invesco Perpetual.

Speaking in a web conference for investors, the manager said that assets in the fixed income market are now being priced accurately, which is good news for investors.

There is still a lack of liquidity in our market, although it is much better than in September to October last year, after Lehmans, Read said.

Liquidity probably wont be like it was two, three or four years ago as capital is being retained, but this ensures the market is priced better, and when it is priced better it will find its own liquidity. But I would guess we will not return to the easy money liquidity available to markets in 2005 to 2007.

Read manages the Corporate Bond fund and the fixed income portion of Monthly Income Plus alongside Paul Causer. Both funds have seen strong inflows this year as investors pile into the asset class.

Read said his successes have come from investments he continued to hold despite turbulent markets, especially at the tail end of last year. His worst performing investments have largely come from the banking sector.

Our mistakes were probably more about last year than this year, he said. We owned AIG and bought HBOS and RBS subordinated debt after the rights issues, thinking we were through the worst. Then [the collapse of] Lehman Brothers changed everything and marked that paper down a lot.

However, Read is optimistic in the potential for quantitative easing to improve the capital structure of the big banks. At times last year our exposure felt like too much, and at times this year it has felt like not enough. This part of the market got badly beaten up and there was almost panic selling. But governments are committed to maintaining the capital structure of these banks. They do not want to be owners of banks, he said.


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