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James Waters Benedicte Gravrand, Opalesque Geneva: James Waters, head of the fixed income client portfolio management team at Columbia Threadneedle Investments, told Sona Blessing in a recent Opalesque Radio interview that an active manager could add value with investment grade credit, high yield and some emerging market bonds.
His firm's outlook on fixed income is quite asymmetric, he says. They expect the economies globally to be relatively benign. "But given where yields are at the moment across most fixed income asset classes, we think returns are going to be relatively muted. Now there are some risks around this so if interest rates start to increase more than what's already priced into the market or credit spreads are widen significantly, and there's a big deterioration in the credit worthiness of credit issuers, then returns are likely to move negative. So our base case is for low but positive returns but there are risks around that on either side: if economies start to pick up significantly and policy rates start to increase, or there's a downturn and the creditworthiness of companies start to deteriorate and hence the spreads widen."
He added that political risk has been most elevated this year, mostly in Europe which is seeing several elections. Whereas last year, concerns were around the US election. "There's still uncertainty around the policies that are going to be...................... To view our full article Click here
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