Tue, Jun 27, 2017
A A A
Welcome Guest
Free Trial RSS
Get FREE trial access to our award winning publications
Industry Updates

Augustus’ Tim Haywood: Investors in government bonds face difficult year due to increased risks and ending of quantitative easing in UK and US

Thursday, January 14, 2010
Opalesque Industry Updates - Tim Haywood, Investment Director at Augustus Asset Managers Ltd ( a subsidiary of GAM), investment advisor to three of the four Julius Baer Absolute Return Bond Funds (total €4572.96m AUM as at 31.12.2009), commenting on investments in government securities in 2010 said:

“Investors in government bonds face a difficult year due to increased risks and concerns over the ending of quantitative easing (QE) programmes in the UK and US. There is a raft of potential bad news overhanging the government fixed-income markets - be it heightened risk of default, rating downgrades, inflation scares when there is so little yield protection, buyers strikes as well as the end of, or pausing in, QE."

“By example, the Bank of England reverse auction of corporate bonds at the end of last week could signal the start of the unwinding of its other, far larger, holdings of gilts. Banks are being encouraged to lend: if that pressure becomes significant, we have concerns that the Bank will not find sufficient buying demand at low yields if this reverse auction programme extends into gilts."

“In the UK, the range of possible outcomes has rarely been wider. At the pessimistic end, interest rates could be on hold for as long as two years as a new government this year concentrates on fiscal tightening, counterbalanced with an easier-for-longer monetary policy. Interest rates at such historically low levels for such a long period will do little to reduce concerns among investors in long gilts about longer term inflation fears."

“Our investment choices currently favour short dated (up to 2 years) sterling fixed income instruments, be that long call options on intermediate Eurosterling contracts, or short equivalent puts."

"Further afield, we are tactically long short dated US government securities after their swan dive last month and the less-than-stellar employment data just released. We are bearish about Japanese government bonds as the authorities there have a 'rising stock of debt / lack of required growth in tax income' dynamic which is becoming increasingly concerning.”


Augustus AM Ltd is an investment manager of segregated accounts and funds. Its core strengths lie in fixed income and foreign exchange markets. The firm manages c. USD$8.8bn of assets as at 30th June 2009 across three areas: traditional long-only, absolute return and single strategy hedge funds. We currently employ 28 members of staff.


Bg

What do you think?

   Use "anonymous" as my name    |   Alert me via email on new comments   |   
Today's Exclusives Today's Other Voices More Exclusives
Previous Opalesque Exclusives                                  
More Other Voices
Previous Other Voices                                               
Access Alternative Market Briefing

 



  • Top Forwarded
  • Top Tracked
  • Top Searched
  1. Legal - Bond market concerns could scuttle Paulson's Fannie-Freddie plan[more]

    From Bloomberg.com: A hedge fund proposal for freeing Fannie Mae and Freddie Mac from U.S. control is poised to face stiff opposition from investors who say it risks wrecking the mortgage-bond market. The Moelis & Co. blueprint, which firms including Paulson & Co. and Blackstone Group LP sponsored,

  2. Other Voices: Are your pricing policies and procedures for less liquid instruments adequate?[more]

    Komfie Manalo, Opalesque Asia: The unrelated position mismarking incidents that quickly precipitated the closures of both Visium Asset Management and Marinus Capital have been recent focal points for market participants, but regulatory scrutiny of valuation choices for less liquid instruments is

  3. FinTech - AI hedge fund Numerai now live on Ethereum, Cryptocurrency hedge funds generate huge returns as bitcoin surges[more]

    AI hedge fund Numerai now live on Ethereum From Cryptoninjas.net: Back in February, Numerai announced numeraire (NMR), a cryptographic token to incentivize a new kind of hedge fund built by a network of data scientists. Earlier today, the Numeraire smart contract was officially deployed

  4. Investing - Advisors slash hedge fund positions, Theravance Biopharma is a top pick of investment guru Seth Klarman, As asset management industry grows a search for new revenue streams[more]

    Advisors slash hedge fund positions From Barrons.com: Financial advisors have cut wealthy clients' exposure to hedge funds by up to one third over the past 12 months, The Financial Times reports. Advisor firms in the FT's annual top-300 ranking have reduced their hedge fund allocation to

  5. Investing - U.S. hedge fund in anonymous bet against Tesco shares, Hedge funds made repeated attempts to invest in Veneto banks, Steve Cohen's Point72 takes stake in struggling electronics retailer Conn's, Hedge fund Excalibur bets Riksbank will tighten by end of year[more]

    U.S. hedge fund in anonymous bet against Tesco shares From FT.com: A $20bn New York hedge fund is using an offshore shell company to anonymously bet against the shares of the UK supermarket Tesco, raising fresh questions over the efficacy of European short selling disclosure rules.