Threadneedle fund manager David Oliphant remains positive there is no fixed interest bubble and the ...
Threadneedle fund manager David Oliphant remains positive there is no fixed interest bubble and the outlook is good for gilts, investment grade and high-yield bonds.
'People claim bonds are looking overvalued at present, but if you take gilts, for example, yields of around 4.5% minus inflation means real yields of around 3%, which looks fair value to me in a low growth world,' he said.
Strong demand for lower risk income generating assets has also boosted corporate bond performance of late, with diminishing supply to bolster this area of the market still further.
'With demand now increasing for corporate bonds, as they offer more in the way of yield, supply in that area has actually dried up as companies look to de-leverage, while gilt supply is set to pick up exponentially as the Government looks to finance various new projects,' he said.
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