M&G Europe's chief investment officer Theo Zemek is tipping continental high yield bonds as due for ...
M&G Europe's chief investment officer Theo Zemek is tipping continental high yield bonds as due for a re-rating.
European high yield bonds, she said, had a particularly tough year with valuations falling to very low levels but the time was now ripe for recovery.
Corporate bond issuance will also remain high, Zemek predicted, with the market being underpinned by both retail and institutional investors. While M&G sees the outlook for fixed interest as good, it also foresees a massive shift away from bonds and cash and into equities by European investors.
Zemek said: 'There is a growing realisation that people, not governments, will have to fund their old age. The better growth patterns offered by equities, along with European pension reforms, will be the drivers for this.'
She predicted that the American model would be the blueprint for European reforms. Under US law, pension holders have the right to distribute their money into funds of their choice and this had proved to be extremely popular. In the long term, the European market may also move in this direction, she said.
Despite improved risk appetite
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